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Before the invasion of the target date funds, most 401(k) plan investors were encouraged to leave their assets in funds that generally contained 100 percent stocks. Despite this, far too many employees opted for the “safety” of stable value funds. While the lack of volatility does indeed sound safe, it is anything but. For that reason, Congress passed the Pension Protection Act in 2006, which was, in part, meant to encourage retirement savers to move away from the “safety” of fixed income or stable value options into what many professionals acknowledged as more appropriate investments for long-term investors. Namely, equities.

Christopher Carosa

BenefitsPRO

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