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IBM Raises the Bar with New 401(k) Plan

 

Excerpt from story:

Doing "anything and everything" may actually be a bit of an understatement. IBM's new 401(k) Plus has just about every modern-day bell and whistle a 401(k) plan can offer at the moment, including automatic enrollment, automatic contributions from the company for all its workers, automatic savings options, customized life-cycle funds with rock-bottom fees, a Roth 401(k) option to appeal to younger workers, an IRA annuity option to assist workers nearing retirement, free education and advice for all participants, and generous matching contributions

 

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IBM Raises the Bar with New 401(k) Plan

 

Excerpt from story:

Doing "anything and everything" may actually be a bit of an understatement. IBM's new 401(k) Plus has just about every modern-day bell and whistle a 401(k) plan can offer at the moment, including automatic enrollment, automatic contributions from the company for all its workers, automatic savings options, customized life-cycle funds with rock-bottom fees, a Roth 401(k) option to appeal to younger workers, an IRA annuity option to assist workers nearing retirement, free education and advice for all participants, and generous matching contributions

 

 

 

Admin --

 

This sounds interesting, but I am just a tad suspicious about the expenses. In 401(k)s, expenses can be extremely difficult to locate, and there are a ZILLION places to hide them. I grew more wary with each new benefit described. Did you get who exactly designed and implemented this? There had to be intermediaries.

 

JudyS

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IBM Raises the Bar with New 401(k) Plan

 

Excerpt from story:

Doing "anything and everything" may actually be a bit of an understatement. IBM's new 401(k) Plus has just about every modern-day bell and whistle a 401(k) plan can offer at the moment, including automatic enrollment, automatic contributions from the company for all its workers, automatic savings options, customized life-cycle funds with rock-bottom fees, a Roth 401(k) option to appeal to younger workers, an IRA annuity option to assist workers nearing retirement, free education and advice for all participants, and generous matching contributions

 

 

 

Admin --

 

This sounds interesting, but I am just a tad suspicious about the expenses. In 401(k)s, expenses can be extremely difficult to locate, and there are a ZILLION places to hide them. I grew more wary with each new benefit described. Did you get who exactly designed and implemented this? There had to be intermediaries.

 

JudyS

 

 

Why do you think there will be hidden expenses passed along to participants? IBM will provide matching contributions of up to 6% of compensaton as well as ancillary services such as investment education. Some employees will get an additional 5% contribution to compensate them for the elimination of the DB plan. The target funds used in the plan were constructed by IBM and participants will be charged only 10 basis points. Most of the money in the plan will wind up being be allocated to IBM stock which even with all the volatility in the stock market is up 25% in the last 12 months. Distributions of capital gains in employer stock are taxed at a maximum rate of 15% instead of the maximum 35% rate for distributions of income.

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Guest Skeptical

Why do you think there will be hidden expenses passed along to participants? IBM will provide matching contributions of up to 6% of compensaton as well as ancillary services such as investment education. Some employees will get an additional 5% contribution to compensate them for the elimination of the DB plan. The target funds used in the plan were constructed by IBM and participants will be charged only 10 basis points. Most of the money in the plan will wind up being be allocated to IBM stock which even with all the volatility in the stock market is up 25% in the last 12 months. Distributions of capital gains in employer stock are taxed at a maximum rate of 15% instead of the maximum 35% rate for distributions of income.

 

Intruder,

 

Do you have a link where we can review the offerings? These organizations (IBC, IBM) tout the great features of their plans but provide scant info. You may be right but I'd prefer to look under the hood.

 

Cheers,

 

Jim

 

p.s Does IBM still allow Ameriprise (formerly American Express) to prospect their employees for variable life and annuities under the guise of 'education'??

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I dont know of any link. You could become an IBM employee and get all the info you like. Why are plan costs soo important if you own IBM stock that appreciates at 12%+ each year over the long term and the capital gains are are taxed at 15%?

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Guest Skeptical
I dont know of any link. You could become an IBM employee and get all the info you like. Why are plan costs soo important if you own IBM stock that appreciates at 12%+ each year over the long term and the capital gains are are taxed at 15%?

 

Well, I didn't issue the press release touting the latest and greatest did I? Easy to make a claim when the media doesn't ask the hard questions. That's exactly what happened with the Florida Model Plan. All press release, no substance. IBM stock growing at 12% per annum? You believe that data does anything to predict the future? I don't.

 

Jim

ps iF you don't know of any link then how can you form an opinion? Just taking the info offered in the article as gospel?

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Guest Sierra

Intruder's quote: Most of the money in the plan will wind up being be allocated to IBM stock which even with all the volatility in the stock market is up 25% in the last 12 months. Distributions of capital gains in employer stock are taxed at a maximum rate of 15% instead of the maximum 35% rate for distributions of income.

 

Intruder,

 

Capital gain rates apply only if the distribution is a lump-sum distribution and is only beneficial if the entire account balance is comprised of employer stock.

 

Moreover, where do you get the idea that most of the money in the plan will be invested in IBM stock? A prudent employee investor would never place more than 10 percent of his 401k balance in the stock of his employer/sponsor.

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I dont know of any link. You could become an IBM employee and get all the info you like. Why are plan costs soo important if you own IBM stock that appreciates at 12%+ each year over the long term and the capital gains are are taxed at 15%?

 

 

Bear Stearns employees must have felt a similar sense of confidence, given that their company had shown long-term appreciation that had survived a depression, two world wars, a cold war and God knows what other national and world events. All that sure as hell changed this week, didn't it?

 

Anyone who throws more than 10% of their retirement savings into any one company's stock is a damned fool. If Bear Stearns hasn't provided a good enough example, there's always Enron, WorldCom, Tyco, et al to look at. IBM's rise at 12% a year makes it a good investment for part, AND ONLY PART, of anyone's retirement savings.

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I dont know of any link. You could become an IBM employee and get all the info you like. Why are plan costs soo important if you own IBM stock that appreciates at 12%+ each year over the long term and the capital gains are are taxed at 15%?

 

 

Bear Stearns employees must have felt a similar sense of confidence, given that their company had shown long-term appreciation that had survived a depression, two world wars, a cold war and God knows what other national and world events. All that sure as hell changed this week, didn't it?

 

Anyone who throws more than 10% of their retirement savings into any one company's stock is a damned fool. If Bear Stearns hasn't provided a good enough example, there's always Enron, WorldCom, Tyco, et al to look at. IBM's rise at 12% a year makes it a good investment for part, AND ONLY PART, of anyone's retirement savings.

 

Hi,

It is considered prudent not to own stock in the company you work for and even go light in the sector that you work. When times are tough, your stock goes down, and your job goes with it. Those companies that FT mentioned are good examples of what can happen. I read that the BS employees owned about 1/3 of the company. I wonder if they saved any of those bonuses that they have received during the good times.

 

Joe

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I dont know of any link. You could become an IBM employee and get all the info you like. Why are plan costs soo important if you own IBM stock that appreciates at 12%+ each year over the long term and the capital gains are are taxed at 15%?

 

 

Bear Stearns employees must have felt a similar sense of confidence, given that their company had shown long-term appreciation that had survived a depression, two world wars, a cold war and God knows what other national and world events. All that sure as hell changed this week, didn't it?

 

Anyone who throws more than 10% of their retirement savings into any one company's stock is a damned fool. If Bear Stearns hasn't provided a good enough example, there's always Enron, WorldCom, Tyco, et al to look at. IBM's rise at 12% a year makes it a good investment for part, AND ONLY PART, of anyone's retirement savings.

 

 

According to media reports 30% of Bear stock was held by employees. However, the Bear Stearns ESOP held about 285M in Bear stock as of the end of of 2007 which was only 3% of the common stock Another 300M was held in diversified assets in the company's PS plan and another $720M in diversified assets in the 401k plan. The remaining 27% of Bears stock was held by key employees in a captial appreciation plan, restricted stock and stock award plan.

 

You are clueless to the difference between financial companies and industrial companies. As a financial company Bear Stearns made profits by borrowng 30x its assets. When the investments Bear held became locked because of the uncertainty regarding their value the company could not sell enough assets to pay its obligations which is why it had to be given a loan by the Fed. Industrial companies do not leverage their assets by such high multiples. In 2007 IBM had profits of 10B on income of 100B. Eliminating the DB plan will save 2.5-3B in expenses per year which could increase profits in future years by as much as 30%.

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LOL...

 

 

Like anyone at IBM cares what bunch of hacks, on a web blog with 15 posters, thinks about their 401k plan...

 

 

Grow up whiners and get lives.

 

Once again I come hear to laugh at fools....

 

Good ol' Joes ... I'm so glad you get your laughs "hear" ... You certainly have contributed nothing of substance. On the other hand, your arguments as a salesman are so incoherent that you are an excellent spokesman for those of us who prefer to invest on our own.

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Guest Skeptical
However, the Bear Stearns ESOP held about 285M in Bear stock as of the end of of 2007 which was only 3% of the common stock Another 300M was held in diversified assets in the company's PS plan and another $720M in diversified assets in the 401k plan. The remaining 27% of Bears stock was held by key employees in a captial appreciation plan, restricted stock and stock award plan.

 

Intruder,

 

What is your source / citation for your claim above? Are you saying that IBM's entire DC program holds less than 2 Billion assets? I believe it's closer to $20 Billion. See freeerisa.com (free registration required) and look up Form 5500 for IBM.

 

Jim

 

 

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However, the Bear Stearns ESOP held about 285M in Bear stock as of the end of of 2007 which was only 3% of the common stock Another 300M was held in diversified assets in the company's PS plan and another $720M in diversified assets in the 401k plan. The remaining 27% of Bears stock was held by key employees in a captial appreciation plan, restricted stock and stock award plan.

 

Intruder,

 

What is your source / citation for your claim above? Are you saying that IBM's entire DC program holds less than 2 Billion assets? I believe it's closer to $20 Billion. See freeerisa.com (free registration required) and look up Form 5500 for IBM.

 

Jim

 

 

Just google bear stearns employee stock ownership for an article by the NCEO. In financial firms most of the bonus, incentive and deferred compensation is paid in company stock.

 

According to published sources the IBM 401k plan has 30B in assets.

 

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Guest Sierra

According to the IRS a Defined Benefit plan must not have more than 10 percent of its holdings in any one security. This law/rule should be extended to Defined Contribution plans, most notably corporate 401(k) Plans. If this rule were in place employees/retirees from Enron---------to Bear would be ok today. I would even extend this law/rule to the IRA where one can place all of his holdings in the common stock of a single company. As a society we must protect people from themselves.

 

Peace and hope,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

New York, NY 10007

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