Today’s Federal Register.
Christopher Oster for today’s edition of the Wall Street Journal has a very interesting article entitled: “The ERISA Trap: Workers Find Limited Rights to Sue Insurers.” (Subscription required.) To be discussed in a separate post today . . .
The National Association of Securities Dealers, Inc. (“NASD”) has launched the Smart 401(k) Learning Center which has some good information for 401(k) plan participants. A summary of what the site offers is found in NASD’s news release about the site:
Whether an investor is just starting out or has already retired, Smart 401(k) Investing has the information needed to understand 401(k) plans. Smart 401(k) Investing guides investors through the process of enrolling and managing a 401(k) account and answers questions about everything from 401(k) investment options to asset allocation and diversification, from moving a 401(k) when changing jobs to handling withdrawals after retirement. It also provides a number of interactive tools, including a Minimum Required Distribution Calculator that allows the user to quickly calculate the amount of money the law requires investors to withdraw from their 401(k), or traditional IRA by April 1st of the year following the year they turn 70 1/2. By simply inputting the investor’s age and account balance, the calculator determines the required withdrawal factor, minimum required distribution (MRD), and the required rate of return needed for the next year to maintain an account balance following a withdrawal.
An interesting section of the site provides some guidance about whether or not company stock is a wise investment for a 401(k) plan participant. The plan participant is warned that employers may encourage them to choose company stock as an investment and that too much company stock is not a good thing. How much is too much? The site states that experts disagree on how much company stock in a 401(k) account is too much, “but many prefer a maximum of 10% to 20%.”
While we are on the subject of 401(k)’s, John Wasik writes this op-ed for Bloomberg.com with some more tips for 401(k) plan participant-investors: “You Can Take Back Your 401(k) Plan.” Mr. Wasik says that “[t]aking back control of your 401(k) or any defined- contribution retirement plan involves asking your company if they’ve recently reviewed your plan to select better-performing funds that charge lower operating expenses.” He goes on to say that “[I]f they haven’t, you can ask them to improve the plan, because they are legally obligated as fiduciaries to do so.”
More on fund expenses from a Standard & Poor’s report (issued August 4, 2003): “Mutual Funds Closed to New Investments Continuing to Charge 12b-1 Fees, Says S&P.” This article by Thompson Publishing Group discusses the release: “Closed Mutual Funds Still Charging 12b-1 Fees.”
News on an underfunded pension plan from Reuters: “General Mills pension plans underfunded by $224 mln.” The article states that GM’s “pension plans were underfunded by $224 million at the end of its recent fiscal year after being overfunded by $571 million the prior year” according to SEC filings.