401k pension Plan - Research Proposal Example

It is a retirement savings plan and its only funds are through the employee’s contributions which are done at the agreed time period and also may involve some contributions from the employer. The advantage with this pension plan is that the contributions which are made to it are from the pre-tax salary hence meaning that they are portable. Over the past decades, it has had a lot of importance in most of the employees working in the private sectors in US. It is due to the increased demand by most of the employees working in the private sectors that it has served as the most popular defined contribution plan which having the largest number of participants and assets.

For example, research tells us that by the year 2006, around 50 million people that is the American workers participated fully at the 401K action plan and by the end of the same years, it was also found that the number of invested assets also grew hence representing 15% of all the retirement assets in US hence this in terms of US dollars can be around $2.7 trillion in assets only. The 401K has its rules and regulations are these rules are constructed by the US tax code hence this pension plan takes its name from the Internal Revenue Code of the year 1978 that created them.

So you will find that the activities of the pension plan can be regulated by the employee benefits security administration in US department of labor. (Ben, 2005). At 401(K) investment plan, you find that there are a number of investing options whereby the participants in this case can fall in the category of their choice. You find that these investments options are grouped in to eight categories. One of the investment options is the equity funds whereby under this investment, it only involves a pooled investments inform of stocks only and an example of such investments may include stock like life insurance, some