Your Personal 401(k) Handbook |
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By Tom Zoellner
As a concept, a 401(k) is a brilliant idea: a tax-deferred personal retirement account, where each employee gets to put on the stockbroker's suspenders and make decisions about his or her own fortune. If the pension fund symbolizes corporate paternalism, then the 401(k) stands for the empowerment of the wage earner.
Over the last decade, 401(k)s have skyrocketed in popularity and have largely taken the place of traditional pension funds. Money stocked away in 401(k)s now represents the average American's largest single pool of investment dollars. An entire industry has grown up around the 401(k), with investment companies hustling like car dealers to sell corporations the latest, best-performing plans for their employees. Today, 401(k)s offer a smorgasbord of financial choices for their customers: small-cap funds, company stock, international funds, index funds, treasury bills, mutual funds.
Yet 401(k)s are not without their problems for the average American. Most bosses give their employees a Hobson's choice when it comes to the chosen 401(k) vendor: take what we give you or don't take it at all. Moreover, the 401(k) presupposes that the average American worker knows what they're doing when it comes to investing money.
Do you have the knowledge to know if the plan your employer is offering is a good one? Read on to find out.
Next: How to spot a good plan >
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