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The Trump administration has decided to allow defined contribution plans, like 401(k) plans, to make private equity investments. Such investments will not be available as standalone options.
Private equity firms are hoping that the new Trump administration makes it easier for them access to something they have long wanted: your 401(k). Wall Street investment giants view Main Street ...
In the United States, a 401(k) plan is an employer-sponsored, defined-contribution, personal pension (savings) account, as defined in subsection 401(k) of the U.S. Internal Revenue Code. [1] Periodic employee contributions come directly out of their paychecks, and may be matched by the employer. This pre-tax option is what makes 401(k) plans ...
In short, the employees who most need a retirement plan may be the ones who can least afford to participate in a 401(k). A big incentive for participating in a 401(k) is getting the matching funds offered by most employers. To get all these funds, employees must contribute a certain amount (often twice what the employer contributes).
In an ERISA-qualified plan (like a 401(k) plan), the company's contribution to the plan is tax deductible to the plan as soon as it is made, but not taxable to the individual participants until it is withdrawn. So if a company puts $1,000,000 into a 401(k) plan for employees, it writes off $1,000,000 that year.
In June, the Labor Department issued regulatory guidance allowing American savers access to invest in private-equity vehicles through their 401(k) retirement plans. While not allowing 401(k ...