What Makes a Happy Plan Sponsor When it Comes to Managing the 401(k)Submitted by BCR Employer Plans on August 23rd, 2017
Offering a 401(k) plan to your company has rewards for both the employee and the employer. Over time, if a plan is not maintained, the purpose of the plan and the details of the plan can be forgotten or overlooked. Here are a few things that plan sponsors love to see when it comes to managing their 401(k) plan:
Having an investment committee process and fund selection process is a good thing. Having a document process is even better. Even though it does take more time to write meeting and process notes, it will be most helpful if there is ever an issue or conflict. Make sure that when you meet with your investment committee or make a fund change, to document and include in your 401k folder.
Staying current and recognizing the fees that the employer and participants are paying is important. Rulings on fee disclosures attempt to make the 401k industry more transparent. Instead of crumbling up and shooting a 3 pointer directly into the garbage can, review these disclosures! The information on these can be very valuable to you and the participants of your plan.
Conducting a 3rd party benchmarking every several years is a good idea. This is a great way to compare your company’s plan to a plethora of other companies with similar-sized plans.
How many times do you get a question from a plan participant? Most of the plan sponsors I speak with are the go-to person for participants. Usually when I meet with a new 401(k) client, I ask groups of participants, “how many of you are comfortable with making investment selections in your account?” The response is not confident and few employees raise their arms excitedly.
The bottom line is most of your participants do not understand or feel fully comfortable making their own selections. Having a consultant or advisor who comes at certain times during the year to teach smart investing can save you time and a lot of energy. Make your advisor come routinely to speak with your participants. The employees will be grateful for what you help with, and want to learn what to do with the money they are deferring for retirement.
Repetition and Consistency
Doing all of this once is a good start, but it is very important that the good start turns in to a regular habit. The key to success with maintaining the 401(k) plan is to remain consistent with documentation, support and plan benchmarking. Doing so will lead to a happier plan sponsor and more confident employees.
Make your 401(k) a priority and a healthy habit!