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☆ Why 401(k) plans are the 'final frontier' for exchange-traded funds
▼ + stars: | 2024-10-17 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Momo Productions | Digitalvision | Getty ImagesWhile many investors have flocked to exchange-traded funds, they haven't gained much ground with 401(k) plan participants. The report found that 401(k) plans used ETFs most readily for sector and commodity funds — but even then, they did so just 3% of the time. Key benefits are 'irrelevant'Mutual funds, collective investment trust funds and separately managed accounts held the lion's share of the 401(k) assets across all investment categories, PSCA data shows. However, those benefits are "irrelevant" in 401(k) plans, Blanchett said. Blanchett said 401(k) plans are also long-term accounts in which frequent trading is generally not encouraged.

Persons: Momo, David Blanchett, hasn't, Philip Chao, Chao, Warren Buffett's, Blanchett Organizations: Exchange, Mutual, Morningstar, Investment Company Institute, ICI, of America, Vanguard Locations: John , Maryland

Tom Werner | Digitalvision | Getty ImagesIf you elected not to participate in your company's 401(k) plan, your employer may have other ideas. The concept of 401(k) plan "reenrollment" has been gaining traction. Most companies, about 85%, direct workers' savings into target-date funds if they're automatically enrolled, according to PSCA data. Workers receive a notification from their employer ahead of reenrollments and have the chance to opt out or reduce their contribution. Employers' hope is that inertia will cause workers to stay in the plan rather than opt out.

Persons: Tom Werner, Digitalvision, reenrollments, Sean Deviney, they're Organizations: of America, Workers, Employers Locations: Fort Lauderdale , Florida, reenrollments

☆ More employers offer a Roth 401(k) — and a Secure 2.0 change may prompt more workers to use it
▼ + stars: | 2023-11-27 | by ( Greg Iacurci | ) www.cnbc.com time to read: +4 min

That share has increased significantly over the past decade: Just 58.2% of employers made a Roth 401(k) available in 2013, PSCA found. Workers pay tax up front on 401(k) contributions, but investment growth and account withdrawals in retirement are tax-free. High earners may also mistakenly think there are income limits to contribute to a Roth 401(k), as there are with a Roth individual retirement account. Those that don't already do so must allow Roth contributions to facilitate this change, or disallow catch-up contributions, according to Principal. When Roth 401(k), IRA savings makes senseRoth 401(k) contributions may not be wise for all workers.

Persons: Roth, PSCA, Hattie Greenan, —, Greenan, Ted Jenkin, Jenkin Organizations: Getty, of America, Finance, Workers, Companies, Employers, CNBC, CNBC's

☆ Biden ESG rule survives challenge in court. 'Tonal shift’ may be biggest victory, lawyer says
▼ + stars: | 2023-09-27 | by ( Greg Iacurci | ) www.cnbc.com time to read: +4 min

The Biden administration rule — which took effect Jan. 30 — was one facet of a White House effort to address climate change. Biden's ESG rule replaced a regulation issued by the Trump administration. That's because ERISA, a federal retirement law, disallows employers from picking investments for ideological reasons. The Biden administration was concerned that the spin around the Trump rule might have chilled plans' willingness to consider ESG factors. "The Biden administration was concerned that the spin around the Trump rule might have chilled plans' willingness to consider ESG factors in evaluating plan investments," Iwry said.

Persons: Joe Biden, Marty Walsh, Anna Moneymaker, —, Biden, Biden's, Trump, PSCA, Andrew Oringer, Oringer, DOL, gunning, Mark Iwry, Obama, Matthew Kacsmaryk, Mark Iwry nonresident, Iwry, Mischa Keijser Organizations: Labor, White, Getty, of America, U.S . Department of Labor, Northern District of Texas, Wagner Law, Department of Labor, Biden, Trump, Brookings Institution, U.S . Department of, Treasury, Brookings, Labor Department Locations: Rose, Northern District, Texas

☆ You may be overlooking an important point about target date funds
▼ + stars: | 2023-07-27 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Meanwhile, the John Hancock Preservation Blend and American Funds Target Date Retirement 2055 funds had lower average allocations — 80% and 84%, respectively, Morningstar said. The idea that everyone in a five-year age cohort should have the same asset allocation, it's just not correct. David Blanchett managing director and head of retirement research at PGIMOf course, TDFs can vary in many ways aside from asset allocation. For example, some are known as "through" funds, which continue to get more conservative throughout retirement; others are "to" funds, whose stock-bond proportions stay steady in retirement. Why asset allocation is more important for retireesPaying attention to asset allocation is particularly important for investors in or near retirement, Pacholok said.

Persons: Lourdes Balduque, John Hancock, Morningstar, Rowe Price, that's, Megan Pacholok, David Blanchett, Pacholok Organizations: John, John Hancock Preservation, Morningstar, of America, Financial Industry Regulatory Authority Locations: BlackRock, TDFs

☆ Thanks to vesting schedules, it can take up to 6 years for workers to own their 401(k) match
▼ + stars: | 2023-05-26 | by ( Greg Iacurci | ) www.cnbc.com time to read: +1 min

One important note: An employee always fully owns their own contributions. watch nowMore than 44% of 401(k) plans offer immediate full vesting of a company match, according to the PSCA survey. Cliff vesting grants ownership in full after a specific point. For example, a saver whose 401(k) uses a three-year cliff vesting fully owns the company match after three years of service. For example, someone who gets 40% of a $5,000 match can walk away with $2,000 plus 40% of any investment earnings on the match.

Persons: Iparraguirre, Cliff vesting Organizations: Federal

☆ Biden used first veto to save a 401(k) investment rule. Here's what it does
▼ + stars: | 2023-03-21 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

watch nowFew 401(k) plans — about 5% — offer an ESG fund, according to PSCA survey data. The [Biden] rule doesn't force you to consider ESG. Under the Biden rule, employers must still consider ESG factors within the context of what is in investors' best interests. "The [Biden] rule doesn't force you to consider ESG," Chao said. The Biden administration issued the final text of its investment rule in November, shortly before Republicans assumed control of the House.

☆ 88% of employers offer a Roth 401(k) — almost twice as many as a decade ago. Here’s who stands to benefit
▼ + stars: | 2022-12-16 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Maskot | Maskot | Getty ImagesThe ranks of employers offering a Roth savings option to 401(k) investors continue to grow, giving more workers access to its unique financial benefits. Workers pay taxes up front on 401(k) contributions, but investment growth and account withdrawals in retirement are tax-free. Almost 28% of workers participating in a 401(k) plan made Roth contributions in 2021, up from 18% in 2016, according to the PSCA. (One important note: Investment growth is only tax-free for withdrawals after age 59½, and provided you have had the Roth account for at least five years.) Some may shun Roth savings because they assume both their spending and their tax bracket will fall when they retire.

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