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Rekenthaler Report

Jason Zweig's Proposal to Scrap 401(k)s

Strictly speaking, destruction may not be necessary, but the suggested improvements certainly are.

Brave New World?
Two weeks ago, The Wall Street Journal’s Jason Zweig published “Forget the 401(k). Let's Invent a New Retirement Plan.” The article neatly connects several of this column’s recurring themes, albeit sometimes in bolder fashion, because while this space--and Morningstar’s retirement research in general--tend to suggest incremental improvements, Zweig's commentary proposes an overhaul.

Improving Accessibility
The 401(k) system’s original designer, Ted Benna, has long been frustrated that 401(k)s are not ubiquitous. To be sure, they increased from nothing to common, but then their progress stalled. As Zweig points out, over the past 20 years the percentage of American workers who have access to employer-sponsored retirement plans has barely grown. Benna believes that the marketplace can take his invention no further; it’s time for regulations to play their part.