Retirement Savings Accounts: Fees, Expenses, and Account Balances (CRS Report for Congress)
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| Release Date |
Oct. 17, 2007 |
| Report Number |
RL34213 |
| Report Type |
Report |
| Authors |
Patrick Purcell, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
According to the U.S. Department of Labor, 51% of all private-sector employeesin the United States participated in employer-sponsored retirement plans in March2007. An estimated 43% of private-sector employees participated in definedcontribution plans, while just 20% participated in defined benefit plans. Definedcontribution plans, such as those authorized under §401(k) of the Internal RevenueCode (I.R.C.), are much like savings accounts maintained by an employer on behalfof each participating employee. The employer and/or employee contribute to anaccount, which is usually invested in stocks and bonds. When the worker retires, heor she receives the balance in the account - the sum of all past contributions plusinterest, dividends, and capital gains (or losses) - as a lump sum or in a series ofpayments. In a defined benefit plan, the participant earns a benefit that is typicallybased on length of service and final pay or average pay. The employer is responsiblefor funding a defined benefit plan and must ensure that the plan has sufficient assetsto pay the benefits that have been earned by the plan's participants.
