1 in 3 workers tapped 401(k)s for loans in 2012, study finds | Senators ask IBM to abandon plan for year-end 401(k) match | Report: Aligning 401(k), health-plan enrollment boosts participation
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March 18, 2013
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1 in 3 workers tapped 401(k)s for loans in 2012, study finds
Nearly a third of U.S. workers took a 401(k) loan or hardship distribution last year, according to a Financial Finesse study. Nearly half of workers earning $35,000 to $60,000 tapped their 401(k) accounts in 2012, while 11% of those with incomes over $200,000 did so, according to the study. The study also said that 34% of women borrowed from their 401(k) funds, compared with 23% of men. Bloomberg Businessweek (3/15)
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Industry Update
Senators ask IBM to abandon plan for year-end 401(k) match
IBM's plan to pay workers their 401(k) match in a single lump sum at the end of the year has drawn fire from Sens. Bernard Sanders and Patrick Leahy, who have written a letter asking IBM to reverse its decision. "When a company makes a promise to its employees regarding their pension, it must not renege on those commitments by cutting or deferring their retirement benefits," they wrote. AdvisorOne (3/15), MarketWatch/Encore blog (3/14)
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Report: Aligning 401(k), health-plan enrollment boosts participation
Bank of America Merrill Lynch says it saw a 6% year-over-year increase in the fourth quarter in the number of workers joining or increasing contributions to its proprietary 401(k) plan business. The company attributed the improvement to the fact that open enrollment for health care was coordinated to occur at the same time as 401(k) enrollment, making it easy for workers to sign up for both electronically. Financial-Planning.com (3/17)
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Obama is expected to announce labor nominee
President Barack Obama today will name Justice Department official Thomas Perez as his nominee for Labor Department chief, according to a White House source. At the Justice Department, Perez is credited with negotiating settlements with banks on behalf of the victims of unfair mortgage-lending practices, and he also played a key role in enforcing human-trafficking laws and protecting veterans' rights. The Wall Street Journal (3/17)
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Financial Literacy
Financial education's missing link
Too many financial-literacy efforts focus only on imparting information about money, and not on making the link to human behavior, writes J.D. Roth, founder of Get Rich Slowly. "Instead of teaching Americans about credit cards and rates of return, we need to be teaching them about behavioral finance," Roth writes. "We need to be showing them how to break free from the ubiquitous marketing messages. We need to be showing them how to set (and achieve) personal goals, especially financial goals." Time.com (3/11)
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Building Your Practice
Life insurance sales must evolve with population, report says
Traditional methods of selling life insurance may be less effective at meeting the needs of a younger, more heterogeneous population, according to a Conning report. Increased longevity and immigration have resulted in higher population growth in some regions and among certain age groups, while employment trends and the declining number of households with children also have affected life insurance ownership, according to the report. "Sales strategies developed around face-to-face interactions with older, higher-net worth customers may not translate well to these changes in the consumer landscape," Conning said. Insurance Networking News (3/15)
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Financial Products
Why collective investment trusts could be a good option
Collective investment trusts offer some of the benefits of mutual funds, but with lower fees. CITs, which aren't marketed to retail investors or traded on exchanges, are increasingly offered as options in retirement plans. They are collections of assets overseen by banks or trust companies and are regulated by the Office of the Comptroller of the Currency. The Wall Street Journal (3/15)
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The injury we do and the one we suffer are not weighed in the same scales."
-- Aesop,
Greek storyteller
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