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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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April 28, 2008 4:20 PM ET
After an initially cool reception, more corporations are beginning to offer employees the option of saving for their retirement in a Roth 401(k) plan. A large number of companies are still turned off by the relatively new retirement plan option, however, fearing that adding a Roth 401(k) feature to their benefits platform will only complicate matters for both employees and employer. Roughly 22% of corporations now offer a Roth 401(k) option to their workers, up from 12% last year, according to a survey from accounting firm Grant Thornton, which, along with Plan Sponsor Advisors and law firm Drinker Biddle, polled chief financial officers and human resources executives at nearly 200 companies. “It’s a considerable uptick, considering just how new these options are,” said Gary Gross, executive director of Grant Thornton’s compensation and benefits consulting group. “And what may be even more impressive is just how many companies may begin offering Roth 401(k)s in the very near future.” Indeed, 24% of the plan sponsors surveyed by Grant Thornton said they are considering adding a Roth 401(k) feature this year. Roughly 60% of plan sponsors said that they are contemplating adding Roth 401(k) at some point in the near future, but decline to commit to a specific timetable. The Internal Revenue Service first permitted participants to make contributions to a Roth 401(k) at the beginning of 2006. Mr. Gross added that a number of employers are still reluctant to add a Roth 401(k) because it would add to the number of decisions employees have to make about their retirement plans. “For one, an employee has to figure out if the Roth is even an appropriate option,” Mr. Gross said. In traditional 401(k) plans, participants contribute pre-tax dollars from their gross pay. The participants are taxed when they withdraw the money as income during retirement. With a Roth 401(k), employees contribute after-tax dollars from their net pay but are not taxed when they withdraw money from the Roth 401(k) in retirement. “It is, in many ways, a bet on your tax position,” said Mr. Gross. The Roth 401(k) may be more appropriate for workers who expect to be in a higher tax bracket when they retire than they are when they start contributing to the plan. This, Mr. Gross said, could be younger, lower-income workers, for example. “Communicating this to your work force can certainly be a challenge, especially when it’s already a challenge to get many of your employers to actively engage in saving for retirement.” To his point, 44% of the companies that do not plan to add a Roth 401(k) option cited “complexity of participant communication” as the top deterrent.
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CRAIN'S BENEFITS OUTLOOK 2009
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