To Rollover, or Not?

Hence the new thinking about keeping assets in 401(k)s. "Moving plan participants from an institutional environment — where they are protected under the [Employee Retirement Income Security Act] and can leverage the sponsor's buying power and lower fee structures — into a retail environment, where they are left naked and have all kinds of choices and costs, is being questioned," says Modestino.

But I've Got Four 401(k)s
In essence, about-to-retire workers can choose to: (1) keep invested assets in their 401(k)s, (2) consolidate these assets into an IRA, (3) cash out, or (4) all of the above. Each has its advantages and drawbacks, which is why employee-investment education like IBM's is emerging as a vital employee benefit. Big Blue teamed with Fidelity Investments and The Ayco Co., part of Goldman Sachs, to develop MoneySmart.

Of course, for sophisticated finance people like CFO Bill Ferko, managing several 401(k) plans in retirement is not difficult. "I've accumulated three 401(k) plans over my career," says Ferko, CFO of Genlyte Group, a Louisville-based manufacturer of lighting fixtures with $1.6 billion in annual revenues. "I expect to leave these assets in the plans and not roll them over."

Genlyte wants to help its employees in much the same way Ferko helped his father with retirement choices. "We publish newsletters and regularly communicate about their retirement investments. We've also introduced an online system [that enables] people to check their balances hourly," says Ferko.

MassMutual is assisting its own and others' employees in a slightly different way, by reinstating the bimonthly check in the mail. The concept, called retirement management accounts, is currently in a pilot stage. It endeavors to assist employees in determining how much income retirees need each month, then draws from their retirement assets to provide those funds. As people's lives change, they can increase or reduce this cash spigot, pulling out more, say, for assisted-living needs or the grandkids' college tuition.

Spruced-up 401(k) plans add some competition to the retirement-investment game, which is good for baby boomers, Gen Xers, and their heirs. To paraphrase the Beatles, "It's a long and winding road." The key is to not get lost, financially, along the way.

Russ Banham is a contributing editor of CFO.

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