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401(k) Today

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401(k) Today

Designing, Maintaining & Maximizing Your Company's Plan

Berrett-Koehler,

15 min read
10 take-aways
Audio & text

What's inside?

Prudent use of a 401(k) savings plan can earn five times the retirement money you might have otherwise enjoyed — but you still have to be vigilant about vendors, fees, management and investments. Heads up!

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Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

With all the political strife surrounding the impending demise of the U.S. Social Security system, it’s refreshing to spend some time thinking about a retirement savings system that is an unqualified success - 401(k). This well-written book offers a clear and straightforward look at the ins and outs of 401(k) - and believe us, there are more of these than you probably know. Although author Stephen J. Butler kept the jargon minimal, this is not light summer reading, but you’ll be glad you upgraded. By the time you put it down, you will understand enough to make sure your 401(k) vendor isn’t pinching pennies from your nest egg. You’ll know what to ask for, what to invest in, and how plans should function. getAbstract recommends this book to those responsible for designing and running 401(k) plans and to those participating in one. (Applies to United States tax laws only.)

Summary

So You Wanna Be A Millionaire?

There’s another way to become a millionaire besides convincing Regis that yes, that really is your final answer! 401(k) plans have made more millionaires than Regis ever will. With a lot of money hanging in the balance, it makes sense for you to know how to structure your retirement plan. The old reliable 401(k) has changed in several ways you should understand.

New laws complicate plan administration, but also create new opportunities. The new rules were supposed to make the plans easier to administer, but they accomplished the opposite. Competitive pressures have made plans that provide valuations daily (rather than quarterly) more affordable. Today, recapturing gives sponsors and participants an opportunity to negotiate lower administrative costs. Of course, the big advantage of the 401(k) is the special tax treatment. Your contributions reduce your salary, since the money you set aside goes into the plan. No state or federal taxes are paid on money deposited to a 401(k).

The public is increasingly aware of the costs of participation in a 401(k) and now can feasibly compare the costs that different vendors pass along. Beware: ...

About the Author

Stephen J. Butler is the founder of Pension Dynamics Corporation, a third-party pension administration firm in Northern California that specializes in implementing 401(k) plans. He also is a popular speaker who is well-known within the pension industry.

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