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A bipartisan-backed Congressional bill would give 401(k) investment managers greater leeway in selecting investment vehicles for employee retirement plans.

The Retirement Savings Modernization Act emerged from the Senate Banking Committee under the guidance of Pennsylvania's Republican Senator Patrick J. Toomey. He and his co-crafters intend to build support for the bill as a critical piece of a year-end financial reform package.

The bill's intent is to encourage retirement plan managers to diversify 401(k) holdings to include such "alternative" investments as real estate and private equity. Currently and historically, pension fund managers have had the freedom to diversity holdings beyond the stock market. But, Toomey said in a release, 401(k) managers have mostly stuck to the market, to avoid possible litigation citing risky investment decisions.

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.