|By John Waggoner, USA TODAY|
You can now roll your 401(k) assets into your company's pension plan and the
Pensions guarantee qualifying workers a set monthly income for life, depending on their salary and years of service. If a private-sector pension plan goes bankrupt, the PBGC guarantees payments, up to
Under the new rules, you'll be able to add your 401(k) assets to your pension, which would increase the amount of your pension paycheck. The amount you add to your pension from your 401(k) wouldn't be subject to the
If you rolled over your 401(k) into your pension and the pension failed, you would get your pension payment up to the
If your company froze your pension plan and it failed, you'd get the amount of your lump sum pension plus your additional contribution from your 401(k) as an annuity payment from the PBGC.
"We think that lifetime income is important, and that if you have a larger retirement paycheck, we think that's a good thing," says PBGC spokesman
In order to roll your 401(k) into your pension, your company must have a traditional pension plan, and your employer must allow you to do it. You may be able to split your 401(k) assets between your pension and a self-directed retirement account. That's up to your employer.
"This is good news for employees," says from
How willing workers will be to add their 401(k)s to their pension is an open question. "While this is a helpful clarification that will remove some barriers to lifetime income, when companies offer lump sum pension payouts, generally people take them," says
Investors in 401(k) programs can always annuitize all or part of their assets when they retire. A company may be able to negotiate better terms than individuals could get, however.
Although companies have been cutting back on traditional pensions in favor of 401(k)s, 118 Fortune500 companies still offer pensions to new hires, according to
PBGC pays the benefits of about 1.5 million people in failed pension plans. Operations are financed by insurance premiums, investment income and assets and recoveries from failed plans.
|Copyright:||Copyright 2014 USA TODAY|
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