Just before high-tailing it out of Washington D.C. for summer break, Congress passed a pension-reform bill that will significantly change how pension plans and 401(k)s and 403(b)s operate — and that’s going to affect you.
The new law, which takes effect in 2008, aims to fix a number of problems employees have with investing for their retirement — including not signing up for a 401(k), not saving enough, and letting funds languish in a glorified money market account.
Companies will now be able to automatically enroll workers in 401(k) and 403(b) plans. Plan providers will also be able to offer specific investment advice to company employees – which was forbidden previously as a conflict of interest.
The new bill also includes a provision that allows companies to increase the percentage of your salary that will be directed to the plan.
And finally, if you don’t choose an investment for your cash, your company will be able to put it into a diversified portfolio of mutual funds for you.
With practical, informative consumer advice, I’m Ilyce Glink, News-Talk 750 WSB