This type of 401(k) plan could boost retirement savings up to 22% — but it comes at a price

MarketWatch

by Robert Powell

February 21, 2026

AI-Generated Deep Dive Summary

A new type of 401(k) plan is gaining traction among employers, promising to boost retirement savings by up to 22%. These managed accounts offer tailored investment strategies managed by professionals, which can lead to higher returns compared to traditional target-date funds. However, they come with higher fees, which may offset some of the gains. Employers are increasingly shifting younger workers, particularly those earning under $100,000, into these plans due to concerns about insufficient savings rates. These managed accounts provide personalized investment strategies designed to meet individual financial goals, offering a more hands-on approach compared to target-date funds, which follow a preset allocation based on age. By defaulting employees into these plans, employers aim to address the growing issue of under-saving among younger workers, who often lack the knowledge or inclination to manage their retirement investments actively. The shift towards managed accounts reflects broader trends in defined-contribution plans, where plan sponsors are seeking ways to enhance outcomes for participants. While these accounts can offer better returns and financial security, it's crucial for employees to weigh the benefits against potential fees. Understanding how these plans work and whether they align with personal financial objectives is essential for making informed decisions about retirement savings. For those considering a switch to a managed account, the key lies in balancing the potential for higher returns with an awareness of associated costs. This approach not only enhances retirement readiness but also underscores the importance of proactive financial planning in achieving long-term financial security.

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Originally published on MarketWatch on 2/21/2026