THE VIRGINIAN-PILOT 
              Copyright (c) 1994, Landmark Communications, Inc.

DATE: Monday, October 17, 1994               TAG: 9410150146
SECTION: BUSINESS WEEKLY          PAGE: 12   EDITION: FINAL 
SERIES: Personal Finance 
SOURCE: BY DAVE MAYFIELD 
        BUSINESS WEEKLY STAFF
                                             LENGTH: Medium:   62 lines

WORKERS MAY BENEFIT FROM COMPETITION TO MANAGE 401(K)S

Employers: If you want to hear from a couple of dozen stockbrokers, insurance salespeople, mutual-fund reps and bankers over the next few weeks, put the word out that you're not happy with how your 401(k) retirement plan's investments are being managed these days.

With more than $475 billion in assets, corporate-sector 401(k) plans are a big business. The competition to manage those funds is growing ever more intense.

And the battle for funds may be a boon to the working Joes and Josephines whose retirement nest eggs are increasingly tied up in 401(k)s.

John M. Peterson, head of the employee-benefit services department of Norfolk accounting firm Goodman & Co., said that about the best most local workers could hope for a few years ago was an annual report on their 401(k) investments and few, if any, investment options.

Today more and more 401(k) investment managers are providing toll-free telephone numbers that allow participants to check their balances daily, and a whole family of investment choices.

And the fees employers are charged to make such services available to their workers aren't any higher and are often considerably less than they have been accustomed to, Peterson says.

All in all, it's a buyer's market for employers thinking about changing 401(k) investment managers. The cost savings and increased flexibility enjoyed by employers are bound to be positive for their workers too, pension experts say.

``As their competitors take advantage of what's happening, it will increase the pressure on employers to create a 401(k) or enhance a 401(k), if they already have one,'' said Jeff Close, communications director for Access Research Inc., a Windsor, Conn.-based company that tracks retirement plans.

Nimble mutual-fund companies are the big gainers in this new world, stodgy banks the big losers, said Goodman & Co.'s Peterson.

``The money that is flowing out of banks right now is incredible,'' he said. ``I'm personally involved in several decisions involving millions of dollars leaving bank trust departments.''

Gary J. Kitts, who oversees retirement-plan administration for Frederick B. Hill & Co., another Norfolk accounting firm, said the declining costs of 401(k) plans will just add to employers' emphasis on such plans over traditional defined-benefit plans.

For an employer of 75 people, it can cost $10,000 or more a year just to administer a defined-benefit plan, Kitts said. A 401(k) plan for the same employer can cost as little as $2,500 a year for administration.

And with the 401(k), unlike the defined-benefit plan, there's no requirement for the employer to kick in money, Kitts points out.

In lean years, companies can stop matching their workers' contributions altogether; in good years, match generously. n MEMO: [For a related story, see page 10 and 11 of The Business Weekly for this

date.]

by CNB