If 401(k) sponsors could design a “perfect” 401(k) plan, just what would it be? According to the Transamerica Center for Retirement Services it would be a plan that helps ensure that workers are participating, contributing, and managing investments wisely in order to adequately fund their future retirement--and helps ensure that workers have a strategy for saving, investing, and transitioning into retirement.

Its key ingredients, Catherine Collinson, president of the Transamerica Center for Retirement Studies, told attendees at the Profit Sharing/401(k) Council of America's (PSCA) 63rd Annual National Conference and Exhibition, would be maximizing employee participation and contribution rates; providing and promoting incentives to save (i.e. employer match, tax incentive); educating and empowering employees to make informed decisions about retirement saving, planning, and investing; underscoring the need for workers to have a retirement strategy; and maximizing plan effectiveness (including investments, education, customer service), and participant satisfaction.

“Many of these opportunities can be implemented within the context of existing 401(k) infrastructure and do not necessarily need to be costly or require major resource investments,” Collinson said. “Much can be done without new legislation or regulatory reform,” she added.

According to Transamerica's September 2010 survey, A “Perfect” 401(k) Plan, 53 percent of workers expect 401(k), 403(b), and IRA accounts to be their primary source of income when they retire. One-in-five workers expect to rely on Social Security. But half of workers disagree with the statement that they are “currently building a large enough nest,” the survey said. “And they are probably right.”

Copyright 2011, The Bureau of National Affairs, Inc.