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Go online for the scoop on 401(k) plans

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By Reid Kanaley
The Philadelphia Inquirer
Published:
An offer of a 401(k) retirement plan is an important benefit no matter how old the worker. The plans for automatic savings, often boosted by an employer contribution, are explained here.
Target dating: In this video on CNBC, an official of mutual fund company The Vanguard Group briefly explains the use of target-date funds for 401(k) plans.
Such managed funds usually reduce risk (and, therefore, returns) as the chosen retirement date approaches. The risk level -- often seen in terms of the mix of relatively stable bonds with more-volatile stocks -- isn't always clear-cut, since even people on the verge of, and into, retirement depend on their 401(k) and other investments to continue to earn returns; bit.ly/MX9Hc4.
401(k) history: An article by Lee Ann Obringer at the HowStuffWorks site describes the history and reasoning behind the 401(k) idea.
The investing option is named for its location in section 401, paragraph "k" of the Internal Revenue Code. Though it was first proposed in 1978, regulations for its use weren't published by the IRS until 1991, according to this post.
Obringer describes advantages of the investment option, including any "free" money that employers kick in when workers divert income to a 401(k), as one case where something that sounds too good to be true really is true; bit.ly/rtczyY.
Enron effect? A posting at KnowledgeWharton defends the use and safety of 401(k) plans, even though the article dates back to just after the Enron Corp. collapse, when many employees of that criminally run company saw their retirement savings wiped out. Reforms in the past decade gave 401(k) investors more latitude in how their funds are invested; bit.ly/MFJLT1.
For the boss: A post for business operators, by Chad Parks on the Fox Business site, explains for employers how to offer 401(k) plans to workers. Parks is in the business of advising firms on their 401(k) options.
He says the plans allow an employee to set aside up to $17,000 in 2012, and represent a significant benefit at companies too small -- or too strapped -- to offer traditional retirement plans, or even matching funds. bit.ly/sFTknO.

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