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The 401(k) of the future?

Posted by: Lauren Young on January 26, 2007

If you haven’t checked out the new issue yet, make sure you look at our retirement coverage. Yours truly wrote a story about self-directed brokerage accounts within 401(k) plans. I spoke to several people who told me that they will be a key component in the 401(k) of the future.

Can you imagine a retirement plan where your core options are lifecycle, or target funds, and then there’s an SDA for the do-it-yourself investor? That’s coming, says Robert Jesch, a direction in the retirement group at Charles Schwab. “There’s no denying plan sponsors are simplifying at the core,” he says. “I see more of them adding a brokerage window for people who want to manage their own investments.”

Kay Conheady, a financial adviser at Apropos Financial Planning in Rush, NY, has witnessed the trend at several companies, including Eastman Kodak, where her partner is an employee. “Companies are replacing traditional choices with these new target retirement funds, and then opening brokerage portals for employees who want more choice and flexiblity,” she says.

If you know of any other companies who are following this next-generation 401(k) model, please let me know!

Reader Comments


January 29, 2007 7:58 PM

401k plans are typically awful. It is not good to hear that we will be limited even more.
Primer on Rolling over a 401k

Peter Blanchette

May 30, 2007 9:19 PM

It appears to me that the 401K is a great tool for companies that do not want to provide pensions to their employees, and a full employment program for the financial services industry. As everyone knows many individuals will likely work for multiple companies during their career. This means that there will be a trail of 401K account bread crumbs as the person moves from one firm to another.

Why isn't it possible for an individual to have a single workplace savings account (called a 401K) that is with a financial services company of the individual's choice? This account(say with Fidelity or Vanguard for example) would remain the same no matter how many firms someone works for. No one can tell me that it is not possible to give each person a routing number(like a checking routing number used for Direct Deposit accounts) when they set up their first workplace savings account. When the individual moves to another job he or she simply provides the same routing number to the new firm so that funds from the new job can flow to the same workplace savings account that was used for the prior job and so on.... The employer is still able to track how much is being invested so that the law is being followed correctly. As it is the financial services industry is making more per invested dollar than they would if there was a single workplace account. What a country!

David Kaplan

April 2, 2009 11:19 AM

How about IRA CD's? Discover Bank has an IRA CD that gives fixed rates (aqs opposed to the typical IRA or 401k (mine has lost 60% since last year).

Guaranteed returns & FDIC insured... ?

Here's a link to the story..

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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