Retirement Security Law Commons^™

Rebalancing Retirement: How 401(K) Plans Exacerbate Inequality And What We Can Do About It, Quinn Curtis, Leo E. Strine, David H. Webber

Faculty Scholarship

Incentives for individuals to save for retirement currently total 1.5% of US GDP. For that substantial investment, we get a system that actually deepens wealth inequality. The top 10% of earners capture 60% of the associated tax benefits, and employer matching contributions disproportionately favor the highest earners. Although defined contribution plans have long been subject to non-discrimination requirements aimed at ensuring that benefits do not accrue predominantly to the wealthiest participants, these rules have little bite. In an irony, we estimate that the entire 401(k) system would fail the non-discrimination test that every employer offering such a plan is expected …

Benefits Transparency, Samantha Prince

Faculty Scholarly Works

Recently, several states and cities have enacted equal pay laws in a push for pay transparency in job postings to inform and help reduce wage gaps. Some of these laws also require a description of the employee benefits that the company offers. However, none of these laws require a detailed description of said benefits, even though employee benefits on average make up 24% of an employee’s compensation.

Businesses can choose how much to disclose with respect to their benefits and they may even engage in what this author calls “benefits washing”—a practice where companies provide vague or misleading information about …

Retirement Lost: Enhancing The Durability Of The 401(K) Account, Anna-Marie Tabor

Dickinson Law Review (2017-Present)

American workers have left billions of dollars in 401(k) accounts that they may never be able to find. The problem affects low-wage workers the most, aggravating income-based retirement inequality. Workers who are laid off or change jobs often leave their 401(k) savings in a former employer’s plan. As time passes, communication breaks down between departed employees and their plans, and changes to the employer, plan provider, or individual accounts may prevent the worker from finding the account. Once participants and plans have lost contact with each other, many plans force transfer balances under $5000 into Individual Retirement Accounts, without the …

Closing The Retirement Savings Gap: Are State Automatic Enrollment Iras The Answer?, Kathryn L. Moore

Law Faculty Scholarly Articles

Drawing on insights from behavioral law and economics, automatic enrollment IRAs are intended to address the nation’s retirement savings gap by taking advantage of workers’ inertia. Although automatic enrollment IRAs were initially intended to apply at the federal level, they have gained little traction at the federal level, and states have begun to step into the breach. Between September 2012 and June 2016, five states enacted state automatic enrollment IRA programs.

Studies have uniformly shown that workers are more likely to participate in an automatic enrollment 401(k) plan than in a traditional opt-in 401(k) plan. Proponents of state automatic enrollment …

Finding A Financial Planner, Emily G. Brown Jd

Pension Action Center Publications

This fact sheet provides information on how to find the right financial planner to help you meet your retirement planning goals. This fact sheet suggests things to consider prior to picking a financial planner and answers questions like:

• What do financial planners do?
• How do you know if you need a financial planner?
• How do you find the right financial planner?
• What type of professional title does a financial planner have?

Your Former Employer’S 401(K) Plan, Jeanne Medeiros Jd

Pension Action Center Publications

When you leave a job where you have participated in a 401(k) plan, you may have a number of different options about what to do with the money in that account. This fact sheet explains those options and offers guidance about the pros and cons of each option.

Here are some frequently asked questions answered in this face sheet:

Q. Can I leave my money in my former employer’s plan?

Q. What are my other options?

Q. If I decide to withdraw the account balance from my former employer’s plan, how do I do that, and how long should it …

Hardship Withdrawals And Loans: Some Words Of Caution, Emily G. Brown Jd, Jeanne Medeiros Jd, Ellen Bruce Jd

Pension Action Center Publications

As defined benefit pension plans become more and more rare, the responsibility of saving for retirement falls increasingly on individuals. Many studies have been published about the average or median balances in retirement savings accounts and virtually all of them have reached the same conclusion - most Americans aren’t saving enough money to last them through their retirement years.

In this fact sheet we will take a look at one of the factors that contributes to this problem, that is, the availability of loans and hardship withdrawals from 401(k) retirement accounts, which can lead to lower account balances overall. Sometimes, …

Employers As Risks, Amy B. Monahan

Chicago-Kent Law Review

In evaluating health and retirement security in the United States, much recent work has focused on shortcomings in individual decision making. For example, in explaining why 401(k) plans are suboptimal for achieving retirement security, a significant volume of literature has catalogued the mistakes individuals make when attempting to save for retirement through such plans. This article seeks to move the discussion of suboptimal decision making in a new direction, by focusing on the impact that employer decision making has on the ability of employees to achieve health and retirement security. The article argues that employer decision making regarding whether to …

A Primer On The History And Proper Drafting Of Qualified Domestic-Relations Orders, Terrence Cain

Law Faculty Scholarship

The divorce rate in the United States is slightly more than one-half the marriage rate. Divorce is a fact of life in this country, and will likely be so for the foreseeable future. On August 23, 1984, the divorce lawyer’s job got more complicated when Congress created the Qualified Domestic Relations Order ("QDRO") as part of some significant amendments to ERISA. QDROs are necessary because before those 1984 ERISA amendments, a lot of divorced persons discovered that they could be deprived of their marital or community property interest in their former spouses' retirement plans. For most divorcing couples, the two …

Social Security Reform: Lessons From Private Pensions, Karen C. Burke, Grayson M.P. Mccouch

UF Law Faculty Publications

Widespread concerns about the long-term fiscal gap in Social Security have prompted various proposals for structural reform, with individual accounts as the centerpiece. Carving out individual accounts from the existing system would shift significant risks and responsibilities to individual workers. A parallel development has already occurred in the area of private pensions. Experience with 401(k) plans indicates that many workers will have difficulty making prudent decisions concerning investment and withdrawal of funds. Moreover, in implementing any system of voluntary individual accounts, it will be important to design default settings that provide appropriate guidance for workers with heterogeneous levels of financial …

Recovering Retirement Security: An Analysis Of The Lockdown Claims Under Erisa, As Illustrated By The Enron Litigation, Margo Eberlein

Chicago-Kent Law Review

This Note discusses Enron's lockdown of its 401(k) plan, the effect this decision had on Enron employees' pension funds, and the legal implications of this decision under the current statutory framework, ERISA. It describes the lawsuit filed by Enron employees in an attempt to recover some of the lost funds, as well as the probability of success for that action specifically and similar actions under ERISA in the future.

Hope We Die Before We Get Old: The Attack On Retirement, Patricia E. Dilley

UF Law Faculty Publications

The American institution of retirement has sustained numerous attacks over the last twenty years, to the extent that it may cease to exist by the time most of today's workers reach their midsixties. Professor Patricia Dilley describes how all of the components of the "three-legged stool" that represents private pensions, personal savings, and Social Security, have declined so significantly in recent years that the combination may not be able to provide support for the elderly in the future, particularly those retired seniors who are in the lower and middle classes. Changes in employment policies, the markets for retirement savings investment, …

Private Pension Policies In Industrialized Countries: A Comparative Analysis, John A. Turner, Noriyasu Watanabe

Upjohn Press

In this comprehensive review of private pension systems in effect world-wide, Turner and Watanabe discuss the fundamental issues facing nations as they adopt and expand private pension systems. Specific policies in effect in several private pension systems are analyzed including those in nations dominating world pension assets (Japan, Germany, the U.K., and the U.S.), as is the country whose system is widely regarded as the model for developing nations, Chile. Turner and Watanabe also provide a compendium on the worldwide trends influencing pension systems and their implications for pension policy.

Pension Policy For A Mobile Labor Force, John A. Turner, Tabitha A. Doescher, Phyllis A. Fernandez

Upjohn Press

Employers often create a conflict between job mobility and retirement security when they deny future pension benefits to workers who quit a job before reaching retirement age. Unfortunately, this deterrent to job-changing inhibits the labor market's ability to adjust. It also means workers may be unprepared financially upon retirement. Turner describes why pension losses are such a significant problem and presents empirical evidence as to the number of workers affected and the amount of losses they incur. He also probes pension portability policy options and looks at portability options in effect in Canada, Japan, the Netherlands, and the United Kingdom.