Nearly 20 years after publishing "401(k)s for Dummies," Ted Benna is getting ready to release an update to the popular 401(k) guide.
The anticipated new book, "401(k)s and IRAs for Dummies," scheduled to hit bookstores in October, reflects the changes that have occurred in workplace retirement plans since the original book came out in 2002, said Mr. Benna, an employee benefits consultant widely regarded as the "father of the 401(k)" for having created and gained IRS approval of the first 401(k) retirement savings plan.
"At this point, IRAs are as big a deal as 401(k)s," Mr. Benna said, explaining that IRA-based plans are sometimes a better alternative for small employers than 401(k)s. Updating the book to include the two types of options, he said, "was important to do."
The book provides guidance for both small employers looking for the right plan for their businesses as well as individual investors seeking to get the most out of their 401(k)s and IRAs.
"This is fairly complicated stuff," Mr. Benna said. "Even though the book is dummied down, it's still pretty significant material to deal with."
Small employers especially have a difficult task given the seven different types of 401(k) and IRA retirement plan options to choose from, Mr. Benna said.
"It's not unusual for small employers to be sold 401(k) plans because that's what they may be looking for and it's certainly what the financial community is structured to do," he said. "The support for the IRA-based plan is pretty limited, particularly for payroll-deduction IRAs."
Mr. Benna, who for a one-time fee helps small employers determine which type of plan is best, recounts in the book how a small employer eliminated its annual 401(k) plan fee and reduced the investment cost to participants to 0.15% from 2.75% by switching to an IRA-based plan. On top of that, the employer "ended up with a plan that was a heck of a lot easier to administer than what they had before," Mr. Benna said.
