The passage of the wide reaching Pension Bill, in development for 7 years, could have a significant impact on anyone who owns a 401(k). This is what Actium LLC of Birmingham, Michigan is counting on to turn their startup into a nationally known brand name.
Birmingham, Mich. (PRWEB) August 9, 2006 -- The passage of the wide reaching Pension Bill, in development for seven years, could have a significant impact on anyone who owns a 401(k). This is what Actium LLC of Birmingham, Michigan is counting on to turn their startup into a nationally known brand name.
Actium LLC (www.myactium.com) provides a managed 401(k) service, which allows a professional to manage a 401(k) on behalf of the account holder. This kind of service was at the center of much of the controversy surrounding the Pension Bill, passed by the Senate on Friday and expected to be signed into Law. Rep Boehner, one of the lead negotiators of the bill, successfully fought to repeal the long-standing “conflict of interest” rule that stopped mutual fund companies from offering advice to 401(k) account holders.
The passage of this bill means mutual fund companies will now be allowed to choose mutual funds on behalf of 401(k) account holders. Those opposed to repealing this rule felt it presented a conflict of interest because it would allow mutual fund companies to choose funds on behalf of an account holder. These choices could favor the fund company at the expense of a 401(k) participant.
The passage of the Pension Bill also means new guidelines that remove liability for companies who choose to use managed 401(k) services. This could be a significant development for those who own a 401(k).
“Some companies will use managed 401(k) services provided by the mutual fund companies, but most companies understand the value of having an unbiased 3rd party managing those accounts,” said Jeff Sinatra, Chief Operating Officer of Actium. “The good news for 401(k) account holders,” said Sinatra, “is that the removal of risk to corporations will result in millions of 401(k) account holders gaining access to professional management.”
Many experts believe the combination of the 401(k) being taken more seriously and the removal of liability should clear the way for a record number of companies offering a managed 401(k) service. Currently, only about 20% offer this kind of service.
In addition to more professional management options, employees will also begin to see auto-enrollment into 401(k) accounts. The bill provides "safe harbor" guidelines for the investment choices made on behalf of the 401(k) account holder who is automatically enrolled. This will likely include a managed account option as well as the use of balanced and time-dated funds – look for the Department of Labor to clarify this in the weeks to come. Studies show the result of auto enrollment will be more people using the 401(k) as a retirement savings vehicle.
The 401(k) is in the midst of change as it takes on many of the characteristics once found only in the traditional pension plan – professional management, automatic enrollment, automatic contribution increases, etc. This bodes well for companies who provide unbiased 401(k) management services, like Actium, LLC
“I think what you’ll see are more choices for 401(k) participants. Companies will likely add managed 401(k) solutions from fund providers as well as services from an unbiased 3rd party,” said Sinatra.
Ultimately, more support options are good news for anyone who owns a 401(k).
Contact:
Jeff Sinatra, Principal / COO
Actium, LLC
460 N. Old Woodward
Birmingham, MI 48009
www.bemanagednow.com (Plan Participant)
www.myActium.com (Plan Sponsor)
P: 248-341-3431
Cell: 617-943-9910
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