How Can I Make the Best 401k Investment?

The 401k plan is also known as the 401K clause. The 401k plan began in the early 1980s and is a fully funded endowment insurance system established by employees and employers to jointly pay.

401K plan

The US 401K is a corporate annuity. The pension in the United States is divided into two parts, one is the social insurance at the national level, which is equivalent to the pension insurance in China, which guarantees the basic old-age life of the employed after retirement. The other part is the enterprise pension plan. The 401K plan is only an important part of it, which is equivalent to China's enterprise annuity plan. It is not rigorous to equate the US 401K plan with Chinese pensions. ^[1]

The 401k retirement plan is not a universal benefit plan. The 401k retirement plan

Private companies abandon the "big pot rice" style employee pension system. In the past, many private companies in the United States adopted "

How is the 401k retirement plan fund invested? The 401k retirement plan has now become the most important employee retirement plan for private companies in the United States. If an employee leaves the company, the money will be owned by the employee. If an employee works in a company until retirement, the money he accumulated during his work is his

As early as around 2004, senior officials of relevant Chinese government departments mentioned the 401k plan in the United States and caused strong response from all sides. The reason was that the stock market was in a downturn at the time. The Chinese version of "401k" is actually the "enterprise annuity" currently being implemented. The predecessor of the enterprise annuity was the enterprise supplementary pension system established in 1991, which has a full 20-year history. However, in 2004, the former Ministry of Labor and Social Security issued Decrees 20 and 23, which completely reformed its investment and operation model and adopted a DC-based trust system model. , Are almost the same as the "401k" in the United States. ^[2]

The 401k plan is a payment-determined (DC) plan that implements a personal account accumulation system, and its establishment must meet certain conditions. The 401k plan is jointly paid by employees and employers, and contributions and investment income are exempt, and personal income tax is levied only on collection. After retirement

Participants in the 401k program operations include:

the promoter, usually the employer;

Trustee, the enterprise shall set up a pension council or choose a professional financial institution;

(3) Account managers, usually financial institutions;

Investment managers, usually financial institutions;

Regulation of 401k plans involves various

Life insurance companies mainly participate in the 401k plan in two ways, accounting for about 25% of the market share in the 401K market.

(1) Provide investment products. Life insurance companies provide diversified investment methods for pension funds through products such as guaranteed income contracts (GICs).

(2) Provide management services. Life insurance companies also

As a non-mandatory

Despite the great success of the 401 plan, it also faces some problems.

(I) The development speed of the 401k plan has begun to slow down. One is that fewer and fewer young people are joining the 401K plan. They are paying high college loans, credit card debt, and putting excess cash into the real estate market. The second is due to the "

First, the state should plan the development of the supplementary pension insurance system at a higher level, and develop a variety of different forms of supplementary pension insurance that cover different occupations and meet various needs, such as enterprise annuities and group annuities. Plans, etc.

The second is that tax incentives (tax exemption for contributions, tax exemption on investment income, and tax collection) are a huge driving force for the establishment of supplementary endowment insurance plans. The state should encourage the development of supplementary endowment insurance through tax preferential policies.

The third is that the pension insurance assets should be effectively used to achieve positive interaction with the development of the capital market and the growth of the national economy.