ABA Family Legal Guide

The Rights of Older Americans

Pensions

401(k) Plans and Simplified Employee Pension Plans

I have read about the retirement savings lost by employees who participated in the 401(k) plans at Enron, WorldCom, and other companies. How can I protect my retirement savings from similar losses?

First, you should study your summary plan description and your annual statement to see how the plan's assets are invested. If you have concerns about how the plan's funds are being invested, you should contact the nearest office of the Department of Labor.

Second, if your plan permits you to control the investment of your contributions, you should be careful not to put a large percentage of your account into your employer's stock or any other single investment.

Third, it is likely that Congress will enact legislation providing greater protection to employees covered by 401(k) plans. Proposals for changes in the law include limiting overconcentration of employer stock in 401(k) plans and traditional defined contribution pension plans; requiring that employees be given investment advice and more financial information about their particular accounts; and requiring employee representation on 401(k) boards of trustees.