Rydex. Rydex. Trading System. Rydex funds. Fund Trading. 401(k). IRA. investment plan. Tax

History of the 401(k) Investment Plan

A primary reason for the explosion of 401(k) investments plans is that such plans are cheaper for employers to maintain than a pension for every retired worker. With a 401(k) plan, instead of required pension contributions, the employer only has to pay plan administration and support costs if they elect not to match employee contributions or make profit sharing contributions. In addition, some or all of the plan administration costs can be passed on to plan participants. In years with strong profits employers can make matching or profit sharing contributions, and reduce or eliminate them in poor years. Thus 401(k) investments plans create a predictable cost for employers, while the cost of defined benefit plans can vary unpredictably from year to year.