What is the story behind this relatively new retirement option?
401(k)s have been a retirement option for only 35 years, and yet roughly 28% of the U.S. population is participating. As mentioned in earlier articles, retirement planning is one of the most important and complex financial tasks clients will undertake in their lives. At a bare minimum, registered representatives should educate themselves about the various retirement plans and products before recommending them to their clients. Since 401(k)s are one of the more popular retirement vehicles, reps should understand their historical evolution — doing so will set themselves apart and demonstrate credibility in the industry and a commitment to their career.
“History cannot give us a program for the future, but it can give us a fuller understanding of ourselves, and of our common humanity, so that we can better face the future.” – Robert Penn Warren1
This month’s newsletter “A History of Retirement Plans and the 401(k)” is an excerpt from our Firm Element CE Course 401(k) Plans. This article discusses how some of the first pension plans in the United States were created, and how they evolved and gave rise to the Employee Retirement and Security Act (ERISA). The article also provides a timeline history of 401(k) plans that illustrate why they have become so popular.
Click here for your copy of the newsletter “A History of Retirement Plans and the 401(k)”.
About the Course
401(k) Plans gives students a detailed overview of one of the most popular retirement investment vehicles. The course begins with a broad history of retirement planning and ERISA, and introduces the two main types of retirement plans. Lesson 2 discusses 401(k) plans in detail, highlighting contributions, distributions, and withdrawals, as well as eligibility and vesting. Lesson 3 delves into what options are available when a plan participant leaves an employer, and covers rollovers and Roth 401(k)s. The final lesson gives an overview of the Department of Labor’s new fiduciary standard and how it will affect 401(k)s.
1 Age-of-the-sage, retrieved 8/18/16 from: http://www.age-of-the-sage.org/philosophy/history/learning_from_history.html