401 (K) S has “portable failed”, which is a problem for employees

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The 401 (K) system launched in 1978 is showing its age and the age of facing major challenges.

At present, Laurie Rowley, co -founder and CEO of the retirement solution company, said that only about 50 % of the workers can access these plans through employers, and the system is not designed to adapt to the increasingly current team of employees today.

This has led to the main problems about account transplantability and disturbing retirement accounts. In the recent decoding retirement incident, Relie emphasized these defects in the US retirement system.

Luo Li said: “The transplantation of the 401 (K) plan is because it has never been constructed as a portable.” She said: “People can use all these patchwork systems,” she said, but it is said that these systems are not. Perfect.

According to Relly, when the employee leaves the employer's 401 (K) plan, one of the four things usually occur.

Some people leave 401 (K) behind. Riley pointed out that about 25 % of all assets in the 401 (K) plan were abandoned or lost. It was 29 million people lost 401 (K) plan. She said: “When they leave it, they will forget where it is.”

Others pushed 401 (K) to Ira. In the 401 (K) plan, about $ 800 billion entered Ira.

She said that a small number of people chose to incorporate them into the new employer's 401 (K) plan, but “it is usually a difficult thing to” fall into another employer's 401 (K) plan. “

In other cases, the employees were fulfilled 401 (K).

She said: “In my opinion, this is the failure of transplantability.” “For us, whenever they change the work of the retirement plan, when they will invest and change the work, we will expect people to make it These decisions. This is the most important asset in people's life, and we ask them to change every few years.

One way owner of the retirement account can solve the “portable” challenge is to push it 401 (K) to Ira.

She said: “I definitely think that everyone should maintain a retirement plan with them.” “I think they should delete it from the employer's plan and put them into IRA so that they can control it.”

In this way, she continued: “They know where it is. They can monitor their investment. They can observe the cost and investment portfolio without losing the plan … I think people need to keep these assets with them throughout their lives.”

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Rowley's company offers another solution called Portable Retirement Plan (PRP). The function of PRP is similar to the traditional plan. In this plan, employees have contributed to their accounts through salary deductions.

She said: “This is a combination of the retirement plan of the workplace and personal plan.” “We know, letting people savings through employers are a really good way to build their own wealth.”

Rowley said that the key difference is that PRP eliminates the cost, complexity and trust responsibility of employers, making it easier to set and manage. Under her solution, the plan was formulated on the icon platform, and the icon assume personal trust responsibility.

She said: “We can put them in a personalized investment portfolio tailored according to their needs. Their savings directly entered their own accounts, because this is a form of IRA.”

Rowley believes that this method ensures that when employees leave work, they can carry the plan with them, thereby eliminating the demand for ruming.

She said: “You don't have to change your investment.” “You don't have to change the plan. You only need to disconnect with your employer. You can continue to use your plan in the next employer.”

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