Happy Holidays! As 2015 comes to a close, we looked back through this year’s blogs to find the most read. This process was instructive. We learned our most popular blogs were the ones written to simplify 401k administration or fiduciary requirements for employers. You can expect more blogs covering these topics during 2016. So, in case you missed them the first time, or just want a refresher, here are our top 10 most read blogs of 2015.
This year, three Internet-based companies joined the retirement plan services industry – Honest Dollar, ForUsAll and Captain401. These startups are noteworthy because they weren’t founded by career retirement plan professionals. Instead, they were founded by Silicon Valley entrepreneurs backed by Venture Capital (VC) investors.
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President Barack Obama will give his State of the Union address at 9 p.m. Eastern tonight. During this speech, he is expected to propose reforms to our private retirement plan system. If he does, it will be second year in a row the president addressed retirement plan reform. Last year, the president created the myRA, a new type of retirement account. If you read my last blog, you know I am not a fan of the myRA. This year, I hope the president will do better by announcing his support for the DOL’s proposed fiduciary rule for advisors overseeing retirement plans, now called the “conflict of interest rule for investment advice.”
In his 2014 State of the Union address, President Obama directed the U.S. Treasury Department to create a new type of savings account for Americans. The myRA—short for “my Retirement Account”—is designed to be a starter account for workers who aren’t covered by a workplace retirement plan.
The Roth 401k concept is outstanding – it provides an excellent way to build long-term wealth and may provide outstanding tax benefits for those positioned to make the most of its advantages. The problem is that very few plan participants use it, let alone understand it.
Forty years after the passage of the Employee Retirement Income Security Act - ERISA – it seems like we are far removed from the issues it attempted to address. In 1974 40% of private sector employees were covered by employer-sponsored defined benefit (“DB”) pension plans. These DB plans provided workers with a lifetime income annuity upon retirement. These plans provided a high level of income security – if the employer met funding requirements. However, many of these plans were only partially funded and plan failures were not uncommon. ERISA required tighter funding requirements for these plans, thus improving workers’ income security. A more fully funded plan was more likely to meet future obligations.