Possible band-aids for your 401(k)

It's no secret that many who've counted on their 401(k) funds to kick in just as they began planning long-awaited, post-retirement trips to Acapulco have been handed bleak news: Due to the current economic climate, their accounts have dwindled to zero, or at least somewhere near the number. Translation? Not only will they have to put any retirement plans in Margaritaville on hold (just keep repeating: it's 5:00 somewhere), and -- wait for it -- they will have to continue working. You know, just to survive, much less for any lofty trip planning.

In our late 50s and early 60s, the last thing most of us want to hear is that we'll have to work another 10+ years. What's even worse? That all the scrimping and saving we endured in our resilient youth failed to amount to more than a couple movie tickets on a Saturday night in our early 60s.

Aside from pulling a Bonnie and Clyde to secure your financial future (they didn't have the most glamorous of endings, anyway), rest easy knowing that legislators know what you're going through and are currently trying to fix it with a legislative band-aid, of sorts.

There are a number of proposals being passed back and forth on Capitol Hill right now, it all comes down to which band-aid they choose:

Relaxed hardship-withdrawal rules: President-elect Barack Obama has proposed temporarily dropping the 10% penalty for hardship withdrawals from an IRA or a 401(k) for amounts up to 15% of your plan or $10,000.

Easing up on required distributions: For those age 70½ or older, Obama has proposed temporarily suspending required minimum withdrawals from traditional IRAs and 401(k)s.

An automatic IRA: Under this plan, designed by a nonpartisan group and endorsed by Obama, small businesses without 401(k)s would have to enroll workers in a payroll-deduction savings plan (you could opt out), but no matching contribution would be required.

A new national savings plan: Proponents of a government-backed retirement savings account that would guarantee an inflation-adjusted return of 3% initially got little support. But recently one of its biggest backers was asked to testify on Capitol Hill - a sign that the plan is getting serious attention. [CNN Money]

If you're a newbie to all things 401(k), read my post "The 411 on 401(k)," to learn how they work.