Check out the Best 401(k)s

Beginning last year, IBM ramped up its 401(k) to one that is truly state-of-the-art. The downside for IBM employees: the upgrade to the 401(k) was partial compensation for the company’s gutting of its once-generous traditional pension plan. But that shouldn’t stop you from holding out Big Blue’s 401(k) to your employer as something worthy of emulation.

IBM now matches employee contributions dollar for dollar on up to 6 percent of an employee’s pay. This is great compared to what most other companies offer. Only 6 percent of companies come close, according to the Profit Sharing/401k Council of America in Chicago. The most common match is 50 percent, granted by 26 percent of companies.

IBM employees can go very simple or get pretty fancy with their 401(k)s. They can choose a traditional or href="http://moneywatch.bnet.com/saving-money/article/ode-to-the-tax-free-roth/277182">Roth 401(k), an option few companies offer yet. For employees who don’t want a long list of mutual funds to sift through, IBM has 23 primary investment products, including four premixed investment funds that range from conservative to aggressive in risk. But for employees who want lots of choices, IBM has available another 200 mutual funds from multiple investment companies.

Employees can also set up their 401(k) for automatic rebalancing. If you want to keep 30 percent of your account in bonds, for instance, your account will automatically rebalance to keep it at that level as market prices fluctuate.

In addition, IBM offers unlimited access to confidential, one-on-one personal financial planning from Fidelity and Ayco, a Goldman Sachs company.

Finally, IBM lets you roll over your 401(k) into an annuity when you retire, which is a way of guaranteeing yourself a lifetime stream of income that you can never outlive. You can choose from multiple annuity providers and can get the investment at IBM’s institutional price, which is a lot lower than you’d be able to find it as an individual on the open market. That means more income for you.

Even with all this, IBM’s 401(k) administrative costs are among the lowest, totaling about 10 basis points a year, according to IBM. That compares to 50 to 100 basis points at most Fortune 500 companies.

It’s great that some big companies offer such bells and whistles, but what about smaller, private firms?

M. A. Mortenson is a privately held, family-owned construction company in Minneapolis. Its 401(k) plan still caught the attention of PlanSponsor magazine, which named M. A. Mortenson “corporate plan sponsor of the year” for 2008.

M. A. Mortenson matches 100 percent of employees’ 401(k) contributions on up to 4 percent of their pay. In addition, there is a profit-sharing plan in which M. A. Mortenson contributes amounts that vary depending on the company’s financial performance.

M. A. Mortenson is also “huge into education,” says Annette Grabow, its manager of retirement benefits. The company requires all new hires to attend a workshop about asset allocation, and it offers other financial workshops conducted by Wells Fargo and other sources ranging from attorneys to the Social Security Administration.

Employees get three portfolio options: create their own, chose from premixed Wells Fargo funds that range from conservative to aggressive in risk, or pay for a managed account through Wells Fargo for individual planning help. If employees build their own portfolio, they chose from 12 mutual funds from various firms, including Wells Fargo, American Funds, J.P. Morgan, Pimco, and others. (In response to employee requests, there’s also a “green” mutual fund that invests in renewable energy.)

The auto insurer Nationwide is unique in two main ways. First, it still offers a defined benefit pension plan and retiree health care, even to new hires.

Second, its 401(k) plan has very flexible loan features. “People will save less if they don’t believe they have reasonable access to the money before retirement,” says Jack Towarnicky, Nationwide’s associate vice president of benefits planning.

Nationwide matches 50 percent of employees’ contributions on up to 6 percent of pay. Employees can choose between a traditional and Roth 401(k).

While many companies require you to fully repay loans against your 401(k) when you leave the company, Nationwide lets former employees keep repaying loans on the established schedule. In addition, even if you quit Nationwide, you can still take out a loan against your 401(k). Employees pay interest on the loans back to their own 401(k)s.

Another interesting loan feature: Nationwide employees can take out 15-year mortgages from their 401(k)s, and the mortgage interest is tax deductible.

Nationwide provides independent financial advice through Morningstar’s “Retirement Manager” product and Goldman Sachs’s Ayco unit. In addition, Nationwide regularly updates employees on whether their 401(k) is on track and, if it’s not, how much they need to increase their savings.

Finally, Nationwide actually reduced the number of investment products it offers to make decision making easier. It now has 15 core choices through different providers, including Vanguard, Diamond Hill, Western Asset Management, and State Street index funds.

Remember, your retirement plan doesn’t have to be gold-plated to be good. But a well thought-out plan can make the difference between achieving your retirement goals and not.