Early Retirement

Brief Analysis #567 - Automatic 401(k)s: A Win for Workers

Congress has made it easier for workers to prepare for retirement by passing the Pension Protection Act of 2006. Most of the media coverage has focused on how the new act will affect corporate defined-benefit pension plans like the one for pilots at Northwest or Delta Airlines. However, the most important and far-reaching features of the bill are provisions that encourage the expansion of such employer-sponsored retirement accounts as 401(k)s and 403(b)s. These reforms — long advocated by the NCPA and the Brookings Institution — are particularly important for younger and future workers. As defined benefit plans dry up, 401(k) plans are becoming the norm.