Americans Like DC Arrangements

Americans tend to view defined contribution (DC) retirement accounts favorably, and they like the way DC contributions and withdrawals are taxed, research shows.

Nearly two-thirds of U.S. households view defined contribution retirement accounts favorably, according to results from a recent survey published by the Investment Company Institute (ICI). Along with strong favorability marks, U.S. households also expressed support for the key features of DC plans—results that are consistent with previous years’ findings.

“Our survey found strongly positive views of U.S. households toward the DC plan system, even in cases in which no one in the household was invested in a retirement plan,” says Sarah Holden, senior director of retirement and investor research for ICI. 

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ICI’s report, “Americans’ Views on Defined Contribution Plan Saving,” is based on survey results from respondents in November and December 2013 about their views on DC retirement account saving and their confidence in 401(k) and other DC plan accounts.

Survey results show that a strong majority (90%) of account-owning households appreciate the payroll deduction features of qualified DC arrangements. Nine in 10 account-owning households also like having control of investment choices within a DC plan; the same number agreed that these plans help them to think about the long term.

The survey also revealed substantial support for the current tax treatment of retirement plans. A strong majority of U.S. households—including those with and those without retirement plan accounts—disagree with the notion of changing the current tax treatment of DC accounts to remove or reduce tax incentives for retirement savings. The survey found:

  • Eighty-six percent of households disagreed that the government should take away the tax advantages of DC accounts, and 83% disagreed with reducing the amount that individuals can contribute to DC accounts.
  • Among households not owning DC accounts or individual retirement accounts (IRAs), 81% rejected the idea of taking away the tax treatment of DC accounts.
  • Eighty-six percent of households overall disagreed with a proposal that individuals not be allowed to make investment decisions in their DC accounts, and more than eight in 10 disagreed with replacing all retirement accounts with a government bond. 

U.S. households generally, whether they owned a retirement account or not, also expressed confidence in DC plans’ ability to help individuals meet their retirement goals. More than eight in 10 households owning DC accounts or IRAs indicated such confidence. This measure of confidence was only slightly less evident—nearly two-thirds of households—among households without a DC account or IRA.

More on the ICI survey results is available here.

Relationship Capital

You’ve heard of financial capital, but do you know about relationship capital?

Relationship capital is one of the most valuable assets an organization has. It is the international currency of sustainable business growth, especially in business networking. The network of people and organizations that represents customers, partners, suppliers, employees, etc. constitutes an organization’s relationship capital. Just like financial capital, relationship capital is accumulated by individuals and used in the production of wealth. It worked for me and I know it has worked for you at times too.

An Organization’s Relationship Capital =  ALL THE RELATIONSHIPS + ALL THE PEOPLE 

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Relationship capital is accumulated by providing help, advice, information, referrals, and other benefits to the people you are in relationship with, while not thinking at all about what you’ll get back in return.

For most of human history, building relationship capital came naturally, especially in smaller communities. But as small communities grew into cities, the sense of community and the close, personal relationships that went with it, disappeared. A vacuum was created by the disappearance of community-based networking. I’ve committed my life to teaching business people how to once again develop the strong relationships needed to create sustainable business growth.

The focus of networking should be 90% giving. Connect with others and brand yourself through generosity. Instead of thinking only about what you can gain…or get…from a relationship, think about how you can give. Relationships develop rapidly when you are a giver, and people will remember you. What do you have that is worth giving? Demonstrate that you can be a resource to others with your professional expertise, external business connections, internal business connections, and community and family connections. Give versus Get.  Pretty unique way of thinking about business growth isn’t it?

Understanding your connections’ needs is equally important.  Spending time with someone that you will eventually have a long term relationship with requires a keen ear and acute listening skills.  Once we understand someone's desires and personal makeup we can truly help them through possible network and personal connections. 

Create systems—through technology and tracking—to help with follow up and follow through to ensure you never forget a name or lose track of a relationship again. If you say you are going to do something, DO IT! If in conversation you say you have a solution, or a recommendation, or something tangible or intangible that would be helpful to that person, be sure you follow through. Trust is the foundation of your reputation and why people recommend you to others. Relationship capital is a catalyst for building trust with people who don't already know you and while providing opportunities based on your reputation.

All these interactions involve the sharing of knowledge, the solving of problems and the creation of connections. Networking IS NOT about the number of connections you've amassed. Networking IS about the quality of your connections and your reputation with those connections.

 

Andy Bluestone is a networker and relationship development strategist. He is an author of numerous articles and a new book, “Harnessing the Power of Relationships." As president and CEO of Selective Benefits Group, he has recruited more than 2,300 sales reps and is engaged in helping closely held companies reduce costs in their 401(k) plans and create an added value to the participants' experience in their plans.     

Selective Benefits Group, 17 Wilrich Glen Morristown, NJ 07960  973-417-6880  abluestone@sbgroup.com    

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

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