economics paper

[Guest trailerpat]

I am writing an economics paper on pensions and need information on how a large company is regulated when employees are contributing to a 401k plan from paycheck deductions. For example, how can a company take money from a specific contribution election such as Fidelity Mid Cap, and change it to another plan such as Morgan Stanley Mid Cap? If the contribution is the employees money, how could this change be made by the employer?

[Guest tsj513]

The plan sponsor also must act as the fiduciary of the plan. This includes sleecting the available investments in the plan based on performance as well as fee structures. When closing out an investment and moving to another, the fiduciary would also be trying to map to a like investment (i.e. if closing out the Company X Small Cap Fund, they would likely move it to the Company Y Small Cap, not the Company Z Blue Chip Index.)

The fiduciary can also be liable for bad investment choices. So for instance when Putnam was impacted by the mutual fund scandals a few years ago, many plan sponsors eliminated Putnam funds as a choice. Otherwise the participants could have sued saying that the sponsor did not meet its obligation as the fiduciary.

[QDROphile]

Employers are not necessairly fiduciaries and only the misinformed employers are fiduciaries. ERISA is the relevant law, and it primarily regulates fiduciaries, not employers. Plan assets are not the property of the plan participants and they do not have any right to determine how the assets are to be invested. One or more fiduciaries are responsible for investing plan assets in accordance with the standards of ERISA, which includes a requirement that assets be managed prudently. To the extent that participants are allowed to direct investnments, that privilege is subject to the authority of the fiduciary to control the investments and the investment options of the participants. The fiduciaries decide what options are available and when to change. Change may be driven by many considerations, some of them having nothing to do with investment considerations. You may wish to explore Part 4 of Title I of ERISA.

[Guest trailerpat]

Thank you for the quick response, I only have so much time for this paper so it is appreciated.

What I am getting from this is that it would not always be good economics to invest in a company's 401k plan then, but to invest in one on your own. I am saying this because of the statement regarding the plan assets not being the property of the plan participant. Why would anyone take a chance that a Ken Lay or Jeff Skilling were calling the shots with the fiduciary. I can show in the plan where the Mid cap swap is down over 7% for the year so I can only imagine how much money was lost corporate wide. I would think that this kind of loss would more than make up for the fees one would encounter investing in a plan outside the employers reach.

[david rigby]

Perhaps you already realize this, but your original post used "plan" almost the same as "investment fund". The plan is sponsored by the employer, and the employees then participate in the plan. These participants (at least in a defined contribution) plan will have accounts consisting of contributions from themselves and/or the employer, plus investment earnings. But the investment itself is not the plan.

[wsp]

Thank you for the quick response, I only have so much time for this paper so it is appreciated.

What I am getting from this is that it would not always be good economics to invest in a company's 401k plan then, but to invest in one on your own. I am saying this because of the statement regarding the plan assets not being the property of the plan participant. Why would anyone take a chance that a Ken Lay or Jeff Skilling were calling the shots with the fiduciary. I can show in the plan where the Mid cap swap is down over 7% for the year so I can only imagine how much money was lost corporate wide. I would think that this kind of loss would more than make up for the fees one would encounter investing in a plan outside the employers reach.

Don't make the mistake of narrowing down your scope to such a scale as investment returns. Perhaps the swap took the funds from a 5% front end load with an excessive expense ratio to an institutional class fund where the fees are the the lowest available. Not to mention the fact that performance after a swap shouldn't be looked at over a window that is too small. If you're focusing only on performance, make sure you take into consideration the 5-10 year period BEFORE the swap. That's more indicative of a funds performance than the 6 months after it takes place. Remember, these are retirement assets. While it is disheartening to see any negative returns, you have to understand that negative returns will happen.

Also, a fund swap may not have anything to do with fund performance. The fund swap could have been, and far more likely was, driven by a change in the plan's recordkeeper. It's very possible that although that single fund swap didn't work out, the 10-15 other funds that were swapped at the same time DID have better performance in the new funds. And, quite possibly, that one fund that didn't had such a small balance in proportion to the rest of the plan that it's returns, while bad for the individuals invested in that fund, are dwarfed in comparison. Lastly, a recordkeeper swap often happens because of service. Sometimes a short term loss is not a bad tradeoff in return for a recordkeeper that provides better service.

As for why one would even use a 401(k)? Tax savings and simplicity....By deferring your income via a 401(k) you are essentially shifting the tax burden until your retirement, or to a point where YOU CHOOSE the timing and the amount of the taxes by taking into consideration the amount and the tax years of the distributions. Additionally, the amounts that can be put into a plan versus an IRA aren't even comparable. And for some, the IRA may not even be an option. In terms of simplicity, nothing beats an automatic payroll deposit. For a large percentage of Americans, that's the ONLY reason they are investing at all. Don't discount that as a factor either...Bottom line is that in return for these tax considerations and other benefits, the plan participant has to give something up; that's short term ownership of the assets. It's the only way that the government can ensure that all of the rules associated with being in a retirement plan are being followed. Ownership of the assets rests with the plan and responsibility for their safekeeping with the trustees.

Lastly, you question why invest in a 401(k) if it might be trusteed by a Lay/Skilling lookalike? I would question why you would be employed by someone like that. 99% of the plan's are trusteed by people who take their roles as trustee seriously. They also recognize that personal liability associated with being a trustee is a bad thing if they can be proven to have failed to follow such safeguards; not to mention the losses to their own personal accounts should something go awry in their plan. Also, from what I understand, the main issue with the Enron plan was that the plan went into a "blackout" period just prior to information being made public that caused the stock price to plummet. Whether the timing was planned or not is up in the air, but that they were changing recordkeepers wasn't necessarily a suprise to anyone. Such changes aren't uncommon.

[Guest trailerpat]

Unless WSP is related to Mr. Skilling or Mr. Lay, I don't understand the negativity in the response. Throwing up your numbers for the 'perhaps' issues does no justice to this discussion. The MS mid cap might have been a percent or two higher over period (x), but if you take several thousand employees losing the 7% that the MS mid cap is down from Jan. 9th, and times that by the average amount these individuals had in the Fidelity Mid Cap account when this happened, this figure could be considerable. This was the only fund that was traded out at the time, not the entire portfolio. This seems to be happening on a regular basis with this fund, and I do not recall one time when the fund has come out for the better. The low price stock fund was removed just prior to it taking off. I don't want to dwell on these, though I could get back to you if you would like specifics so a comparison of all of them could be done. I look at many of these different comparable funds a couple times a week to keep track of how things are on average. I also have compared choices to other 'company plan' choices and I do not like the differences I see. Why wouldn't someone be concerned when year in and year out, the picks in this companys portfolio underperform so many others? This is why I am saying that I do not see the 'company 401k plan' as being a good choice of economics if it were possible to put the individuals same money in a 401k that was not connected to the company plan. There is another discussion going on in this web site about an individuals wife whos company went bankrupt. What if the company that I am referring to goes into bankruptcy also? If an individual can get into their own 401k (which I do not know if it is even possible) why would they trust a company they work for to have that much control over their savings? This does not make any sense as this is the reason people are being told to diversify and not put all you eggs in one basket. If you have all your money for your retirement in your company's plan, isn't that the same basket as the one their stock is in?

The tax savings are on the front end of a 401k, which help out greatly at tax time every year, especially if the contributions are maxed out. What happens if at retirement time, the taxes have been raised since the initial contributions were made? Aren't you losing more than if you used an IRA and paid 'known' tax rates? I understand you cannot contribute as much into these as the 401k's, but you can put them in your spouses name as well if they do not have a company plan. It would also seem that if we go back to the egg basket, you would be better off if some of your savings were in the 401k, while you also had savings in an IRA so you are not paying taxes on all of your retirement income, just the withdrawals from the 401k.

I am quite sure that the people that worked for Enron trusted those individuals also. The average investor in a company plan is not going to have a clue as to who their "trustee"(s) is/are, and for the most part they do not know their CEO or president or anyone else very far above their immediate supervisor. When 30 years of savings is gone because of individuals like that, all other people need to be paranoid about what could happen to their savings as well. The good people of Bethlehem Steel, LTV Steel, Republic, and a whole host of others know this also, and the disruption in lifestyle can be devastating. Not only do I know a lot of these people, I am one of them.

[Guest Pensions in Paradise]

Are you writing an economics paper for 6th grade? Because you clearly have a limited knowledge of economics, retirement plans, investing, etc. I hope your paper isn't due any time soon.

[Guest trailerpat]

Excuse me Pensions in Paradise? If you have nothing productive to contribute, keep your ignorance to yourself, you are not needed or wanted in this discussion threads. Go back to 'my space'.

[Mike Preston]

Trailerpat, this is a fascinating discussion.

Your posts bring up many issues and it is very difficult to give short answers without giving short shrift answers.

Being foolish, though, I shall try.

Q from Trailerpat, as interpreted by me: If an individual has a choice to invest in a company 401(k) or a personal 401(k) wouldn't they be better off to invest in the personal 401(k)?

Possible issues that impact on this one question:

1) What is this individual's investor IQ? For every individual you show me with an investor IQ that is "high", I will show you a hundred with investor IQ's that are "very, very low".

2) How much monitoring of investment choices does this individual want to engage in? For every plan that you show me which has made unfortunate, or even disastrous choices as far as investment funds, I can show you hundreds where individual investors have made far poorer choices.

3) Can this investor be trusted not to invest in scams? For every plan that has an unfortunate theft, I can can show you dozens where individuals have lost their IRA's to unscrupulous sales pitches.

Each of these issues is a two-edged sword. If you vest the individual with rights, they also get the responsibilities. There is no such thing as a free lunch.

Overall, ERISA's fiduciary model provides significant advantages for most participants. Does it absolutely provide that a company president or CFO can't conspire to systematically undermine the plan's investments? No, it doesn't.

There are many other issues that tend to favor the employer sponsored plan over the individual model you theorize (even if it could be legislated into existence, which I doubt). Company matching contributions are not going to be made to an individual plan. As most financial advisors will attest, where else can you get a 25% to 100% return on your "new money" guaranteed, year after year.

The primary issue that undermined ENRON's plan was the investment in company stock. While the other funds may not have performed spectacularly, they did not suffer a 100% loss.

I could take your entire message apart, line by line, and provide fodder for each point, but time is limited.

Suffice it to say that if employer 401(k) plans were a bad idea, on balance, they would be abandoned in favor of something else.

Since they are growing by leaps and bounds, ERISA's fiduciary model must be doing something right.

Have fun.

[Guest trailerpat]

Mr. Preston,

Thanks for your reply/comments. I did not wish to make this into anything that would get out of control because of interpretation. I came to this site to do the research I needed for some answers and that involves questions, regardless of how some people may think of the questions.

Although the paper I am working on will be a typical matter of fact finding, reporting, hand it in and I'm done. Afterwords, I still have to deal with numerous large groups of individuals who, because of matters in the past losing pensions, or knowing people that have lost pensions, don't trust anyone when it comes to these matters. I am a 36 year union member that has lost pension rights and it is a terrible blow. It is too late to start over, so for many in our society today, that now means work till you die! Fortunately for me, I have made investments and don't think that I will have life all that difficult when I decide to retire.

So I think it is easy to picture that I could not stand up at a union meeting and tell the membership they should have paid more attention in 6th grade economics as the one reply had stated. There was no such animal when I was in a Catholic grade school that far back. And I certainly would not be taking economics now if I knew so much about them that I did not have to ask questions. I most definitely pity someone who believes they have learned so much in life that they have no more questions.

Enough of that as I do not want to take up any more time.

Believe me that I do want to believe myself that the company I work for would have a plan that had a responsible fiduciary and that the considerable investments I have in there will not be lost before I do take my retirement. I move mine about according to market sector performance. The majority of investments in each of the funds available are listed in the prospectus. Knowing what my investments are doing is what is upsetting when a fund is suddenly removed from my choices, and replaced with the scenario discussed, but you are most assuredly correct when referring to what could happen if people were left to do investing on their own.

I am sincere about the question regarding the tax in and out with the IRA's compared to the 401k's. Future taxes are unknown, except that they will most certainly go up. It would be harder to calculate needed investment condidering that unknown. You invest in an IRA after paying the known tax. This investment was suggested as a supplement to the 401k, not a replacement.

Thanks again for your insight as the ERISA is a little deep for me in some of the language.

[RCK]

It would help if you could clarify what kind of economics paper are you writing and to whom you are turning it in.

[Mike Preston]

I do not find your tone to be anything other than genuine. If your paper is similarly expressed, I'm sure you will do fine.

Let me briefly address some of the points you raise.

...The MS mid cap might have been a percent or two higher over period (x), but if you take several thousand employees losing the 7% that the MS mid cap is down from Jan. 9th, and times that by the average amount these individuals had in the Fidelity Mid Cap account when this happened, this figure could be considerable. This was the only fund that was traded out at the time, not the entire portfolio. This seems to be happening on a regular basis with this fund, and I do not recall one time when the fund has come out for the better. The low price stock fund was removed just prior to it taking off. I don't want to dwell on these, though I could get back to you if you would like specifics so a comparison of all of them could be done. I look at many of these different comparable funds a couple times a week to keep track of how things are on average. I also have compared choices to other 'company plan' choices and I do not like the differences I see. Why wouldn't someone be concerned when year in and year out, the picks in this companys portfolio underperform so many others?

The decision to swap out a fund, as has been previously mentioned, is a fiduciary decision. The law (ERISA) recognizes that a fiduciary decision is not to be reviewed (as you have done) based on "results." That would be preposterous, as nobody can predict the future and would leave nobody willing to serve. Instead, the ERISA fiduciary model revolves around what I will loosely characterize as "the process." If a fiduciary goes through an appropriate "process" to determine a course of action that follows another concept generally referred to as the "prudent man rule" (please look that up, as your paper will be much better if it references it), then the action (such as swapping out a fund) is not subject to Monday morning quarterbacking by the courts. The participants, such as yourself, however, aren't bound by such mundane matters as appropriate fiduciary conduct and, instead, as you have done, look to results. In the greater scheme of things, the ERISA fiduciary model has served plans well. Could you be talking about a plan that has snake-bit fiduciaries who seem to consistently make choices which turn out poorly? Certainly. But a single example of bad luck doesn't say anything about the system, as a whole. Yes, those participants aren't happy about what has taken place. But reviewing the decisions on the basis of results is not what the ERISA fiduciary model allows.

This is why I am saying that I do not see the 'company 401k plan' as being a good choice of economics if it were possible to put the individuals same money in a 401k that was not connected to the company plan. There is another discussion going on in this web site about an individuals wife whos company went bankrupt.

If you equalize the investment IQ, and the time and ability to apply that IQ, then I would agree with you that a personal investment option would be far better. You may be interested in knowing that some companies provide for just this sort of option from within their company 401(k) plan. It goes by different names, but it is basically a system whereby a brokerage firm establishes a separate account for each participant and their 401(k) monies are allowed to be invested just as if they were in their own IRA. That is, the participant, and not the fiduciary, controls the buying and selling of securities. In such an option, the participant can usually invest in any marketable security and in some, can even invest in options. If an individual was in a position to weigh two job opportunities, where one offered such an account and the other didn't, and they held the belief that self-investment were wise, they would no doubt go to work for the company that provided this as an option.

But most companies shy away from this option because of expense (it is certainly a much more expensive way to run a plan) and, to a lesser extent, the ERISA fiduciary model I have already mentioned. The exact reasons would take too long to get into, but maybe somebody else can provide a brief summary for you.

The point I'm making is that there are others who agree with you that setting up a plan that maximizes the participant's control over their own investments is a "good thing."

What if the company that I am referring to goes into bankruptcy also? If an individual can get into their own 401k (which I do not know if it is even possible) why would they trust a company they work for to have that much control over their savings? This does not make any sense as this is the reason people are being told to diversify and not put all you eggs in one basket. If you have all your money for your retirement in your company's plan, isn't that the same basket as the one their stock is in?

Theoretically, whether a company goes BK or not is irrelevant to the 401(k) funds. They are supposed to be kept separate and it is a rare case indeed where monies are stolen without recourse. I don't have the statistics but if you dig, my guess is that the risk is almost (but unfortunately not quite) non-existent. Note that I am separating out the theft of monies from the situation where the plan invests in company stock of the plan sponsor. Many agree with you that investment in company stock of the plan sponsor needs more controls than currently exist. The eggs/basket argument is one of them that makes a lot of sense when an individual's retirement is dependent, in large part, on the performance of that one security.

So, no, having much of your money in a company 401(k) is dramatically different from having much of your money invested in a single security, unless that 401(k) invests primarily in, well, a single security (usually the plan sponsor's stock).

The tax savings are on the front end of a 401k, which help out greatly at tax time every year, especially if the contributions are maxed out. What happens if at retirement time, the taxes have been raised since the initial contributions were made? Aren't you losing more than if you used an IRA and paid 'known' tax rates?

This is a valid point. I sometimes wonder whether people recognize that they are better off, in the long run, to not contribute to a 401(k) in years where their tax rate would be extremely low. Admittedly, this is sometimes difficult to predict (as in "difficult" = "almost impossible"), but if it could be predicted, you are absolutely right. Keep in mind, though, that the company match makes the tax rate issue evaporate as it will always tip the scales in favor of investing in the 401(k). I invite you to fire up your favorite spreadsheet program and prove it.

I understand you cannot contribute as much into these as the 401k's, but you can put them in your spouses name as well if they do not have a company plan. It would also seem that if we go back to the egg basket, you would be better off if some of your savings were in the 401k, while you also had savings in an IRA

If I can cut your sentence off here, you again make a valid point. With the exception of investment monitoring overhead (it takes more effort to monitor your 401(k) and your IRA than it would to merely focus on a consolodated 401(k)), diversity is a "good thing" and should be encouraged.

so you are not paying taxes on all of your retirement income, just the withdrawals from the 401k.

Don't understand that subsentence. Taxation of 401(k)'s and IRA's is essentially identical. You pay tax only on monies withdrawn and not on anything left in the account.

I am quite sure that the people that worked for Enron trusted those individuals also. The average investor in a company plan is not going to have a clue as to who their "trustee"(s) is/are, and for the most part they do not know their CEO or president or anyone else very far above their immediate supervisor. When 30 years of savings is gone because of individuals like that, all other people need to be paranoid about what could happen to their savings as well.

Agreed as to the basic premise. But I believe you are speaking now to the investment in company stock, not the general ERISA fiduciary model. You need to ensure that you separate the themes in your paper or it will sound like an uninformed rant, which I know you want to avoid.

The good people of Bethlehem Steel, LTV Steel, Republic, and a whole host of others know this also, and the disruption in lifestyle can be devastating. Not only do I know a lot of these people, I am one of them.

Sorry to hear of your troubles, but this issue is a completely different one. The above were defined benefit plans and, unless my memory is faulty, most of the participants in those plans received 100% of the benefits that had been earned in the plans. Their benefits were paid from the PBGC (a governmental agency that is set up to provide just this sort of protection). And while the PBGC doesn't promise that 100% of everybody's pension will be protected, it does provide that most people will receive 100% of what they are promised. Generally, the folks at risk are those who are high income earners, such as pilots. The pilots at United, Delta, et al. have typically suffered significant reductions in their promised benefits. But the steel companies' employees don't make the kind of money that pilots make.

I hope this provides you with some fodder for your continued research.

[Mike Preston]

I am sincere about the question regarding the tax in and out with the IRA's compared to the 401k's. Future taxes are unknown, except that they will most certainly go up. It would be harder to calculate needed investment condidering that unknown. You invest in an IRA after paying the known tax. This investment was suggested as a supplement to the 401k, not a replacement.

As I mentioned in my other reply, tax arbitrage is difficult to predict. But if it can be predicted, your point is valid. Most people can't micromanage this issue effectively, however, so the conventional wisdom is to defer taxes today and then be in the catbird seat later.

[Guest Pensions in Paradise]

If you are worried about the tax rate for future distributions, you may want to read up on the Roth 401(k).

[RCK]

Am I the only one cynical enough to think there is no paper to be written, and there never was?

[Guest jrzgrl]

Oh no, I'm right there with you.

[Guest Pensions in Paradise]

I'd make another comment, but I'm too busy posting on My Space

[Mike Preston]

Yeah, you are probably right. But I'm an incurable romantic.

[wsp]

I thought that too after I was annointed a relative of Lay or Skilling for offering up likely motivations for a legitimate fund swap and protecting the 99.9% legitimate trustees out there.

Very well could be a paper but certainly won't be an objective look at 401(k) plans and the processes involved in closing a fund and transferring the assets to a new one. Of course that paper likely would have received an "F", simply for the fact that it would put a prof. to sleep.

And now I shall go back to my internet browsings. I want to see PIP's My Space page. I'm guessing it will have video of Tom singing from the last ASPPA conference.

[Bill Presson]

Have Tom and Derrin ever done a duet?

[SteveH]

Well it was a little fishy that there were two people asking for hellp with a research paper on the same day. It is October. We all know that no one starts research papers until a week before the semester is over. Even then, in this day in age can't you just hire a company on the internet to bust one out for you?

[Mike Preston]

Maybe it was posted by the proverbial internet company?

[rlb64]

I'm surprised that we haven't gotten sophisticated enough to see more trading flexibility as we see in IRA's, especially in light of web technology. I realize a plan can have brokerage accounts, but why can't we have daily val recordkeeping covering any number of mutual funds and stocks, without the need for a side account? Why can't I choose a fund I liked before my employer changed recordkeepers if it may also be traded by the new custodian? Why can't investment election forms allow the choice among the 1000's of mutual funds that might be available?

I would personally like to see our future 401k plans change the definition of a plan's fund menu to a list of suggestions, not limited options. If my E-trade account can value each of my 5 different brokerage accounts all linked together under my name (on a daily basis with no custodial fees), 401k plans should be able to offer the same technology for each of my 401k sources.

My E-trade account also allows me to choose investment advice from E-trade. Why can't I choose to pay my 401k custodian or any other investment professional for that matter for investment advice for my 401k accounts - without running into fiduciary liability concerns? My account can just be linked to any investment professional given access by me!

I also find it interesting that all plan sponsors have to go through the expense of 5500 audits when I don't believe E-trade has to go through any type of finanial reporting for its daily valuation. Why can't the 5500 Schedule H be limited to one audited filing by the recordkeeper for all participants/employers?

I think if we see more separation from fiduciary control and liability, the more people will appreciate 401k plans. These are the questions I would add to this economics paper...

[Guest trailerpat]

I want to take a moment to thank all who had constructive contributions to this topic, especially Mike Preston. You gave a great effort in deciphering the content of the information to be as precise and helpful as possible. I don't understand the rude or degrading comments from a couple of the thread participants. I am doing a paper and do not particularly care whether anyone wants to believe it. There should also be no surprise if someone else was as well, I know there are more students other than myself in my class when I look around. What difference does that make, as well as what difference would my degree of education level make as well? Questions are what generate discussion, which in turn develops new ideas that help this great country go forward as fast as we have in our history as compared to the rest of the world. That is why we have the ability to have discussion threads such as these. No one has all the answers and if someone does not have something positive to say, they should stay out of the discussion. Maybe they could go take some sensitivity classes instead of using their down time on 'my space'.

Again, thanks Mr. Preston, I am pursuing information in other areas you pointed me to, as well as using the great information you and a couple of others provided. Your wealth of information has been a great help and I would recommend this site to others in the future.

[Mike Preston]

If you get the time, please post a synopsis of your paper and the comments from your professor.

I will let you know in advance that professorial comments are typically not experience-based and I am likely to therefore disagree with them. Nonetheless, I'm interested in knowing their tenor.

[Disco Stu]

I am doing a paper and do not particularly care whether anyone wants to believe it.

If you want any help from us, perhaps you should care a little more whether we believe it. Perhaps you could have been more clear and less combative when asked to clarify what sort of paper you were writing. You were asked this multiple times (though one instance wasn’t particularly polite). This is a message board primarily used by benefits professionals to talk among themselves. We are often happy to assist lay people when we can. As a rule though, we don’t like being jerked around. I have no idea whether you’re telling the truth about your economics paper. I’m pretty skeptical though, and nothing you’ve said so far has done anything to dissuade me. Some of your posts, (particularly post #7 in this thread) imply to me that you have other interests in mind. And if it isn't obvious already, I'm not alone in my skepticism. Perhaps that says more about your attitude in this thread that it does about everyone else’s.

[WDIK]

Let's see...

1) Could have been more clear.

2) Could have been less combative.

3) Must be asked multiple times.

4) Has other interests in mind.

Based on my experience as an adjunct professor, the poster could very likely be a student working on an assignment.

[Kimberly S]

Let's see...

1) Could have been more clear.

2) Could have been less combative.

3) Must be asked multiple times.

4) Has other interests in mind.

Based on my experience as an adjunct professor, the poster could very likely be a student working on an assignment.

Having just taught a pension law class at a local university, you are absolutely correct!

The big issue among my students, that appears relevant here as well, is the public's lack of understanding that their 401(k) money is NOT a personal savings account to be used, withdrawn and/or invested as they choose. Many media articles make reference to the participants' "right" to choose investments. Since ERISA sees that issue totally differently, it is an unfortunate perpetuation of misinformation. It doesn't appear that the paper writer ever fully understood that either. Those of us who work in the industry tend to forget that the general population doesn't understand this issue.