Attention, workers: A battle is brewing over your 401(k).
A number of people who are changing jobs, being laid off or retiring are finding themselves in a tug-of-war between their former employers and investment firms eager to win their business. At stake: almost $400 billion of assets in 401(k)s and similar retirement plans that are eligible to be rolled over into other vehicles this year, according to Allianz SE’s Pacific Investment Management Co., or Pimco.
<><> <><>
<><><><>View Full Image
David Walter Banks for The Wall Street Journal
Chris Green, formerly of the Miami Dolphins (below), at his home office. The National Football League refuses to relinquish control of his 401(k) until he reaches age 45.
<><><>
<><><>
Getty Images
When an employee leaves a job, he or she is generally free to roll over certain retirement accounts like a 401(k) into an inidual retirement account. But many employers, for the first time, are trying to hang on to their 401(k) participants.
Some plan providers and employers, such as International Paper Co., are dangling carrots like low-cost investment options, financial planning or annuity-like products. Others are using sticks, criticizing IRA rollover advertisements or dragging their feet when workers ask for withdrawals. A few, including the National Football League, have even erected barriers to keep people in their plans for a certain number of years. NFL spokesman Brian McCarthy says a rule change “could be considered as part of a new collective bargaining agreement.”
Big IRA players are fighting back. Firms like Charles Schwab Corp., Fidelity Investments and Scottrade in recent months have rolled out new online calculators, blogs and other features in an effort to boost their IRA business. Some firms even shower investors with cash to attract rollover dollars. TD Ameritrade Holding Corp. and E*Trade Financial Corp., for example, are offering up to $500 to people who sign on.
Historically, most employers have been happy to see retirees and job-changers take 401(k) balances with them, in part because of the headaches involved in keeping them in the plan. But that is changing. According to a survey by management consultant Casey Quirk & Associates LLC, roughly two-thirds of plans with more than $1 billion in assets said they want to retain worker accounts after retirement. The result “was a shocker,” says Ben Phillips, a partner at the firm.
<><>
Weekend Investor
Intelligent Investor: ETF Hidden Tax Traps Muni Bonds Riskier Than You Think Reverse Mortgages Look Cheaper Should You Jump into Stocks? Insurance Strategies for Long-Term Care …
Read the original article at WSJ
Related Posts
Tags: account, Banks, Business, Car, cash, financial, Insurance, Investments, Job, journal, mortgage, offer, retirement, stock, Wall Street
