401(k) Accounts Are Losing Money for the First Time
New York Times (07/09/01) Vol. 14, No. 6 p.A1; Hakim, Danny

Despite thousands of dollars in new contributions and some strengthening of stocks in recent months, the average 401(k) retirement plan lost money last year. This new trend, which marks the retirement vehicle's first decline in its 20-year history, is exposing mistakes made by employees. While employees cannot control such factors as stock market declines and company contributions that shrink profits, shifting account balances over the last decade point to a nation of workers that have either contributed too much into a single aggressive mutual fund or grown too dependent on stocks, or both. According to a report from Cerulli Associates, a benefits consulting firm, the average 401(k) account fell from $46,740 in 1999 to $41,919 in 2000. Since that time, says one Cerulli analyst, rough projections show that the average account has shrunk $600 more, to around $41,300.

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