If the federal government's recommendations go through, managing your 401(k) account could be as easy as ordering take-out food, even across multiple workplaces.
The Government Audit Office (GAO) has proposed creating a nationwide 401(k) dashboard. This allows a user to manage all her 401(k) accounts in her one place, and also organizes plans for users with multiple accounts.
“Participants continued to face challenges in managing and tracking their accounts as they moved from one job to another,” the GAO report said. “However, federal action could alleviate these challenges.”
GAO said in its report that Congress should give federal agencies the authority to create dashboards, but it's unclear when the wheels will start moving.
And while it could be a one-stop solution for retirement planning, the former Carnegie Mellon professor says the dashboard provides enough information to 401(k) plan participants to evaluate their performance. I'm not sure.
“Dashboards are great for cars and other items to make sure the system is working,” says the tool, which allows users to search 60,000 401(k) plans and compare them by industry. said Raul Valdez Perez, CEO and co-founder of Benchmine. , geography and asset size.
stress and anxiety
Valdez-Perez said the federal government and 401(k) plan holders could benefit from tools that allow for comparison and navigation.
Such tools also answer questions such as: “Where can things improve?” What performance level can a 401(k) plan reasonably achieve?
“We are introducing new technology that allows us to easily assess comparative performance,” Valdez-Perez said of the Squirrel Hill-based company.
Employer-sponsored 401(k) plans have become the most common way for American workers to save for retirement. But every time an employee changes jobs, they may end up creating a new account if they don't combine their accounts along the way.
A GAO study released in February found that two-thirds of 401(k) participants find a comprehensive pension dashboard, which allows them to see current and previous plan savings all in one place, a useful resource. I feel that.
According to GAO, more than 92 million Americans participate in 401(k) plans, saving more than $7 trillion.
Employees and former employees typically have little say in how company-sponsored 401(k) plans operate, including in terms of fees, expenses, and the selection of vendors to provide services. However, in many plans, if a participant-directed brokerage account is an investment option, an employee can choose to invest in her 401(k) from a basket of investment options.
According to Benchmine, 2022 federal data shows that 405 of 828 401(k) plans with assets of $1 billion or more offer a participant-directed brokerage account option.
According to the GAO, transferring retirement benefits from one plan to another causes stress and anxiety for some participants.
“401(k) participants who recently completed rollovers between plans faced challenges in understanding and complying with the plan's requirements,” GAO said. The report did not specify which parts of the rollover process were most problematic for plan participants, but a high percentage were dissatisfied.
“Beneficial for participants”
For example, 25 percent of participants said the process had too many steps to follow, and 22 percent said the questions and information on the rollover form were unclear.
“Enabling plans to automatically roll over after changing jobs is beneficial for participants, especially those who are no longer in the plan, as they can benefit from account consolidation without going through a difficult manual process. “There is a possibility that
The idea comes from a study by GAO of six countries that have implemented pension dashboards: Australia, Belgium, Denmark, the Netherlands, Norway, and Sweden. All six countries have established a central pensions dashboard that allows participants to view their retirement savings online, free and securely.
Benchmine provides more insight into your 401(k) plan, but accessing the information requires more steps than a simple dashboard.
The Benchmine search engine is a free online tool that provides public access to data that all companies that offer 401(k)s to their employees are required to report annually to the U.S. Department of Labor. Users can see how their 401(k) balance and annual contributions compare to the average balance for employees at a particular company. Or you can compare it to the average balances of employees at other companies across the country.
The Benchmine search engine shows you exactly where your company's 401(k) stands compared to other companies across a variety of measures, and it also offers advice on how to improve it.
Valdez-Perez said search engines can also be helpful for job seekers, since a poor 401(k) plan performance can be a red flag.
“The 401(k) plan is just another aspect of how the company operates,” Valdez-Perez said. “Just like high employee turnover, poor 401(k) plan performance raises red flags.”
