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  1. #1
    Senior Member jp_48504's Avatar
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    Rule would encourage automatic 401(k) enrollment

    http://news.yahoo.com/

    Rule would encourage automatic 401(k) enrollmentEncourage or Force?

    By Kathy Chu, USA TODAY Mon Aug 22, 7:10 AM ET

    The Department of Labor expects to propose a regulation by year's end that will encourage companies to automatically enroll their workers in 401(k) plans.


    "We want to remove barriers for people to save for retirement, and automatic enrollment really addresses one of the problems that people face: They may be overwhelmed with the responsibility of saving for retirement," says Ann Combs, assistant secretary at the Labor Department's Employee Benefits Security Administration.

    Once the regulation is proposed, the public will be able to comment on it before it becomes final. The regulation could affect millions of workers in 450,000 retirement plans.

    In the typical 401(k) plan, employees decide whether to invest and, if they choose to, how much and where to put the money. But 19% of large employers automatically enroll workers, at an average rate of 3% of annual pay, according to research firm Hewitt Associates. This compares with 7% of companies that did so in 1999.

    The Labor Department says the proposed regulation should give employers who automatically enroll workers in a 401(k) plan some protection from lawsuits if the investment options chosen are "reasonable." Some companies are reluctant to use automatic enrollment for fear that employees whose investments lost money would sue.

    The regulation also likely will tell companies that "they can offer balanced investment options with a little more risk but with returns that allow people to save enough for retirement," says Combs.

    Many companies that automatically enroll employees use conservative money-market or stable-value funds as a default. These are relatively safe but aren't likely to produce as much growth as balanced equity options.

    If employers view the Labor Department's guidance favorably, it could be seen as removing the last barrier to automatic enrollment, says Jack VanDerhei, a fellow at the Employee Benefit Research Institute. The IRS has blessed some aspects of automatic enrollment.

    Automatic enrollment can be extremely effective in boosting 401(k) participation, especially among young and lower-income workers, says Brigitte Madrian, a business professor at the University of Pennsylvania's Wharton School.

    Taking advantage of 401(k) plans is becoming increasingly important as companies drop pension plans. The number of private-sector pension plans fell nearly 50% in the last decade to 31,238 last year, according to the Pension Benefit Guaranty Corp.

    Companies also have a business incentive to get employees enrolled because an IRS rule limits the amount higher-paid workers are allowed to save to the amount rank-and-file workers actually contribute.

    But automatic enrollment is not a panacea, VanDerhei says, because the company's choice of investment options and contribution levels might not work for many employees.
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  2. #2
    Senior Member jp_48504's Avatar
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    What happens to the 401k's when the company goes bankrupt? The people who have put their money and trust in it will be the loosers. I can save on my own.
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  3. #3

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    This is nothing more than another back door attempt...

    at propping up paper financials...and one of only dozens of attempts.


    Back in the third quarter of 2001 the Feds bullied the SP500 index into removing four commoditiy indexes that were performing extremely well and replaced them with 4 paper indexes that like the others didn't do much.

    Comparing the SP500 today to the SP500 before 2002 is comparing apples and oranges. I no longer follow the SP500.


    Shortly thereafter, quite a few dot coms including my own dropped Manulife (which had an extremely varied and attractive portfolio) and replaced them with 401K managers that were paper only. I effectively got pushed out of gold, silver, energy and other commodity or "need" economy based positions. The assinine part was the 401K "assumed" I wanted an agressive stock portfolio instead the of the cash default as most 401K started you in in the past - awaiting you to make a decision. I gave em and earful and moved the position of ginnie maes.


    A couple other 401Ks my wife and I carry suddenly around 2002 announced without explanation that they were no longer accepting new contributions to already enrolled funds - guess what they were?

    Yep...gold, silver, energy...etc. All the ones - and only ones - generating 7% or more growth per year while all the paper stuff were in the negative - some really negative.


    Franklin-Templeton is the only one we have left with commodity funds that accept contributions. That's it...

    Pisses me off...the manipulation is so friggin blatent it isn't even transparent anymore. It is outright fraud in my honest opinion.

    So now - we buy our own stuff directly (except for GNMAES).

    I buy commodity or "needs" based stocks. Doing quite well...

    I buy stocks in small companies that serve very specialized functions...

    And we put savings in cyclical CDs...


    A word of advice to all...

    DO NOT...I WARN YOU...DO NOT PUT ANYTHING IN A 529 FUND!!!

    It is not a college savings plan....it is a trap designed by the socialists in congress through slick marketing to trip up the "middle class" from rightfully exercising the "depedency cancellation" loophole that allows middle class young adults from getting the same financial grants as any other student.

    They are hoping that you will realized 18 years to late that you have been robbed by your own choice.

    =
    Not serious about illegals, outsourcing and insourcing? Wait until magicians pull illegals out of their hats...

  4. #4

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    For those who don't know what I'm referring to...

    The dependency cancellation loophole explained...

    The federal government, in this case, those member of congress who are closeted socialists try every way they can to keep children from so-called middle and upper class families from receiving financial aid grants - not loans - but grants.

    But these socialists always get tripped up by two things that underlie American law and principle:

    1. The sins of the father are not the sins of the son.

    2. Equal protection under the law.


    Here's how even the children of the "filthy" rich would get the same financial aid grants as others for all the time financial existed...

    1. Child is finishing Junior year in high school.
    2. Parent that April files taxes in which that specific child in longer claimed as a dependent and and exemption.
    3. The following year come early Spring the child applies for financial aid. In doing to the child answers "no" to the dependency question on financial aid form. The child does so legally.
    4. That April the parents again do not declare that child as a dependent and exemption.

    The above forces under Federal Codes to NOT request tax information via the student from the parents. It is EXPLICITLY illegal. The financial aid officer CANNOT ask.

    In other words - only the students personal tax returns can be factored in determing an award. Some of that tax money the parents paid in over the years gets returned to the student in the form of a grant. In other words - the family is not paying twice - no robbing Peter to give to Paul.


    The Socialist in Congress using slick marketing terms such as, "college savings plan", "tax breaks", "saving for the future", "incentives", etc., are hoping that you'll bite and either forget the above are be totally unaware of it.

    It is a trap...because...

    1. It is your money - not the childs.
    2. A decade or so later you have a decision to make...

    Either A...

    Cash the plan to yourself and take a 10-30 percent tax penalty....

    or B...

    Cash it to the student entering second year of college without a personal tax penalty...


    However, going with B will result in an immediate reduction in financial aid grants to the student at a minimum average of 82 percent by some estimates.

    Why? Because when you cash it to your child - you are declaring to the government by name who the money is going to - and they of course will inform the student directly and/or indirectly that the student must declare it on their personal tax return.

    Result?

    Stafford loan anyone? Bust out the family piggy bank anyone? Like paying twice anyone?

    Not much different with the current situation where you pay twice when enrolling children in private school is it?

    Now you know why public school teachers and their unions AND the government don't want a voucher system.

    =
    Not serious about illegals, outsourcing and insourcing? Wait until magicians pull illegals out of their hats...

  5. #5
    Senior Member jp_48504's Avatar
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    mrrabbit,
    Thanks for the great information. I will have to pass it on.
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  6. #6
    Senior Member Mamie's Avatar
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    Quote Originally Posted by jp_48504
    What happens to the 401k's when the company goes bankrupt? The people who have put their money and trust in it will be the loosers. I can save on my own.

    ENRON!
    "Those who cannot learn from history are doomed to repeat it" George Santayana "Deo Vindice"

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