Many of us baby boomers have strayed a bit off the road to retirement readiness. We have become distracted, indulged ourselves and have forgotten to contribute. This Christmas, our Uncle Sam ought to consider improving our 401(k) plans, gifting us with:

Unlimited Roth 401(k) contributions. Many baby boomers are hundreds of thousands of dollars behind in making 401(k) contributions. Current catch-up contributions of $5,500 annually will never allow us to catch-up. Our elected officials should consider allowing unlimited Roth 401(k) after-tax contributions. No issues with state or federal revenue loss here since these unlimited contributions would be after-tax.

401(k) account transfers four times per year. We have done a poor job managing our retirement plan accounts. We buy into equity markets at the top and sell them at the bottom. Daily valuation of our 401(k) accounts is great. Daily transfer ability? Not so great. How many of us can say that we have added a lot of value to our 401(k) accounts because of the smart trades we’ve made? Legislators should consider permitting 401(k) plan account transfers only four times per year, at the end of each quarter, to help save baby boomers from themselves.

The end of participant loans. It is too easy for many 401(k) plan participants to get their money and never pay it back. More than 80% of all participants who terminate with an outstanding loan default on it rather than pay it back. Loan options may have been an attractive feature when the 401(k) plan was first born. However, now it is primarily a source of account leakage. Plug the leaks. Outlaw 401(k) plan loans now.

No money until retirement age. Allow trust-to-trust transfers of 401(k) plan balances only. No IRA rollovers, no distribution checks made payable to participants under retirement age. Many 401(k) plan participants find it too easy to take withdrawals from IRAs or not rollover their entire balance.

Get all company stock out of 401(k) plans. Company stock has proved to be a poor investment for many 401(k) plan participants. Senior management is often conflicted in providing advice and guidance about investing in company stock. Require companies with existing company stock in their 401(k) plans to transfer it into an employee stock purchase plan.

Help us, Uncle Sam, to use our 401(k) retirement plan for our retirement. Happy holidays and Merry Christmas to all!

Contributing Editor Robert C. Lawton is President of Lawton Retirement Plan Consultants, LLC a Registered Investment Advisory firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be reached at or 414.828.4015.

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