Summary of Financial Article

Summary of Financial Article

           'The Big Business of 401(k) Plans' discusses 401(k) packages; according to investopedia.com, a 401(k) is a qualified plan established by employers to which eligible employees may make salary deferral contributions on a post-tax and/or pretax basis. The article mentions big brokers and banks such as Fidelity, ING, and Bank of America Merrill Lynch, that dominate the 401(k) business. Being a retirement fund, the package is a concern for employees who don't realize how much they are spending and how much they are getting ripped off.

            The article also discusses a part of the 401(k) package, revenue sharing; according to investorwords.com, revenue sharing is the practice of sharing operating profits with a company's employees, or of sharing the revenues resulting between companies in an alliance. Revenue sharing is considered the problem with 401(k) packages, many packagers manage to steer employees in the directions of mutual funds, which are more expensive, and allows the packager to make a profit on the investment. A lot of companies give their employees the option to use revenue sharing, but many encourage their employees to use the transparency option.