The Success of the Retirement Plan System
The private employer-sponsored retirement plan system has been successful at providing retirement benefits for tens of millions of American workers. Employer-sponsored retirement plans primarily benefit middle class families: 80% of participants in 401(k) plans make less than $100,000 per year, and 43% of participants make less than $50,000 per year.
The key factor that determines whether or not these middle class families save for retirement is if there is a retirement plan available in the workplace. Over 70% of workers earning between $30,000 and $50,000 per year will participate in a retirement plan at work, but less than 5% will save through an IRA on their own.
While the retirement plan system works well, there are changes to the current rules that would enhance coverage and simplify the way employer-sponsored retirement plans operate. American Retirement Association has developed a document entitled Proposals to Enhance the Private Retirement System which contains over 30 legislative proposals to improve upon the current system. These proposals would expand employer-sponsored retirement plan coverage, and simplify retirement plan administration through modest changes to the Internal Revenue Code and ERISA.
401(k) plans did not even exist in 1975, which is the last time the Department of Labor (DOL) issued regulations defining a fiduciary with respect to providing advice… Read More.