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Growth and Development of 401(k) Plans – A Retrospective

Section 401(k), added to the IRC by the Revenue Act of 1978, formally sanctioned the use of salary reduction as a source of tax-deferred retirement plan contributions. The law went into effect on January 1, 1980 and the first 401(k) plans became operational after the IRS issued regulations in late 1981 (though a few brave pioneer sponsors did jump the gun).

More 401(k) Advisors assume a formal fiduciary role

Our (Brightwork Partners) most recent survey of 600 advisors active in 401(k) gathered information on advisor perceptions about their fiduciary status to plans, the extent to which plans are covered by a formal 3 (21) or 3(38) fiduciary services agreement and whether those services were being provided directly by the advisor or by a third party fiduciary such as Mesirow.

401(k) Advisors have a New Look

The ongoing surveys of Advisors in 401(k) conducted by Brightwork Partners document major channel shifts over recent years. Looking back to 2005, insurance – and wirehouse – affiliated advisors dominated the sale and service of 401(k) plans; together these two channels comprised 62% of all Advisors active in 401(k). By last year that had fallen to 35%.
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