401(k)

While recessions are almost impossible to predict, employers can plan for the financial impact caused by workforce adjustments that inevitably happen every year.

Financial practitioner Aaron Brown takes a look at the logic behind modern day 401(k) plans.

The pandemic is affecting one of the best perks of workplace retirement-savings plans: company matches to employee 401(k) contributions.

Years from now, terminated employees may discover they have less income in retirement due to an automatic rollover or automatic cash-out from a previous employer.

An early look at the impact from the economic shutdown was not as bad as feared, while industry insiders see opportunities for advisers and sponsors to talk up the value of retirement and emergency savings.

The lack of seamless plan-to-plan asset portability prevents participants from easily moving and consolidating their 401(k) savings, leaving them open to the temptation to prematurely cash out their 401(k) accounts from prior employers’ plans.

A retirement expert advises employers on helping workers save for the future during this pandemic.

The CARES Act waiver of penalties for premature 401(k) withdrawals may hurt the very American workers and families the Act is supposed to help.

Gauging any possible changes to their health insurance coverage is just one consideration they must address before they retire.

For starters, they can use the windfall to pay off debt, shore up their HSAs and build a cash reserve.

For one, clients will owe taxes still on the distributions, unless they recontribute the money into the account within three years.

Older clients are advised to take extra steps to protect their finances as the current crisis may leave them prone to making poor financial decisions.

Clients are advised to minimize spending and tap possible sources of cash and credit, including their tax refund.

Clients are advised to keep some of their savings in cash and focus on their long-term prospects.

“Find ways to generate income,” says one financial planner.

While some retirees have seen a substantial increase in spending, many others are enjoying financial freedom.

Aside from refinancing, retirees are advised to consider downsizing their homes to reduce overall spending.

To start, these clients are advised to start saving as early and contribute enough to their 401(k)s to qualify for their employer's matching contribution.

With hardworking African-American and Hispanic workers far more likely to cash out than other participants, our nation has a serious retirement-saving crisis on its hands.

“The financial burden of student loans is a major reason fewer employees are taking advantage of 401(k) programs,” Scott Thompson, CEO of Tuition.io, says.