Thin(k) About Your 401(k) Plan: What A Great Benefit!
It’s unsurprising that American workers love their retirement plans and don’t want them to change. The Investment Company Institute’s (ICI) recent research report, “American Views on Defined Contribution Plan Saving, 2020” confirms this fact in no uncertain terms. ICI has conducted this study for 13 years. Here are two key takeaways from the report.
First, American workers, who have a 401(k) plan or an IRA, like them and believe the accounts are instrumental in helping incentivize saving.
- More than 90% of these workers agree that the plans simplified the saving process, helping them focus on the long term and
- 86% agreed that the tax treatment was a big reason they were saving. Almost all of these workers agreed that they should be able to choose and control their investments in the accounts. And
- 83% felt like retirement accounts could help them meet retirement goals.
Second, there’s a lot of talk in the political arena about altering retirement benefits to generate tax revenue, and workers are paying close attention to this. They strongly oppose changes to the tax advantages, contribution limits and removing control of investment decisions that come with 401(k) plans and IRAs:
- 87% of those saving via a 401(k) plan or IRA disagreed with the concept of the government taking away the tax advantage.
- 89% disagreed with the idea of reducing contribution limits. And
- 89% disagreed with the thought of giving away their ability to decide how to invest their money.
These results should clearly indicate to plan sponsors that they offer a benefit highly valued by their workers and that the workers gain financial security by receiving the benefit. The American retirement plan system is functioning well and workers do not want the benefit to change, especially when it is to their disadvantage. As my father used to say, “if it ain’t broke, don’t fix it.”
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