401(k) Plans Still a Mystery to Most
The quiz, sponsored by JP Morgan/American Century Retirement Plan Services, showed:
- only a quarter of the 750 respondents answered seven or more out of 10 questions correctly
- one-third thought a annual maximum contribution limit did not exist
- six out of 10 could not correctly list the main benefits of a 401(k) plan
On the plus side, participants were better informed about the fact that:
- a company can’t legally tap an employee’s plan assets if the company goes bankrupt (72% knew that one)
- a supervisor can’t look up their personal plan information (67% was in the know)
Still, the lack of understanding about 401(k) basics underscores the need for retirement education, said Diane Gallagher, manager of participant communications for J.P. Morgan/American Century Retirement Plan Services. “Chances are, the bulk of an individual’s assets is in retirement plans,” Gallagher said. “It’s probably the largest amount of money most people have to manage. This makes it imperative for mutual fund companies and other plan providers to offer clear, comprehensive educational programs to reach these millions of individuals.”