Fixing the 401(k)

Lawmakers are floating a number of ideas to protect your retirement savings. Here are a few possible changes.

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By Penelope Wang, Money Magazine senior writer

(Money Magazine) -- What is Washington, D.C. cooking up in response to the retirement savings crisis? With a new administration in town, there's a good chance some reforms may take place. Here's a look at four of the most discussed proposals:

Relaxed hardship-withdrawal rules

President-elect Barack Obama has proposed temporarily dropping the 10% penalty for hardship withdrawals from an IRA or a 401(k) for amounts up to 15% of your plan or $10,000.

Easing up on required distributions

For those age 70 or older, Obama has proposed temporarily suspending required minimum withdrawals from traditional IRAs and 401(k)s.

An automatic IRA

Under this plan, designed by a nonpartisan group and endorsed by Obama, small businesses without 401(k)s would have to enroll workers in a payroll-deduction savings plan (you could opt out), but no matching contribution would be required.

A new national savings plan

Proponents of a government-backed retirement savings account that would guarantee an inflation-adjusted return of 3% initially got little support. But recently one of its biggest backers was asked to testify on Capitol Hill - a sign that the plan is getting serious attention.  To top of page

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