Your company’s 401k plan is like a kitchen remodel from a decade ago – functional but potentially outdated. Many companies set up their 401k plans and then neglect to revisit them. However, taking a step back to assess your plan can reveal critical issues and opportunities that impact both your finances and employee satisfaction.
Threat #1: High Costs
High costs are a significant concern when managing a 401k plan. Do you know exactly how much your plan is costing your company? Beyond administration fees, there could be hidden fees lurking beneath the surface.
- Understanding All Fees: Are you aware of all fees associated with your plan, including administrative and investment fees?
- Benchmarking Costs: Have you compared your plan’s costs with similar companies in your industry recently?
- Regular Fee Reviews: Does your plan advisor regularly review and discuss these fees with you?
Threat #2: Compliance Challenges
Compliance with ERISA regulations is crucial for 401k plans. Non-compliance can result in significant penalties and damage to your company’s reputation. Key compliance issues include non-discrimination testing and fiduciary responsibilities.
- Transparent Communication: Are you communicating clearly and transparently with your employees about the plan’s terms and benefits?
- TPA Engagement: Is your Third-Party Administrator (TPA) proactive in addressing your plan’s needs and compliance requirements?
- Non-Discrimination Testing: What were the results of your last non-discrimination tests?
- Regulatory Updates: Is your plan advisor keeping you informed about regulatory changes, such as Secure 2.0?
Threat #3: Employee Perception and Engagement
Your 401k plan plays a vital role in recruiting, retaining, and rewarding talented employees. A suboptimal plan can impact employee satisfaction and retention rates.
- Employee Participation: What percentage of your employees actively participate in the 401k plan?
- Employee Experience: How satisfied are your employees with their interactions with the investment company or TPA?
- Matching Contributions: Do you offer matching contributions, and how competitive are they compared to industry peers?
Opportunity #1: Better Value for Your Benefit
Just as a high-quality remodel can increase the value of your home, a well-managed 401k plan can work to provide significant advantages for your company. One crucial factor is offering a plan with a diverse range of investment options at competitive fees.
Having a robust menu of investments allows your firm to demonstrate compliance with industry standards and show dedication to your employees’ financial well-being. These investments should cater to employees at all career stages, from entry-level to near retirement, offering choices without excessively high fees that can erode savings.
Questions to ask about your company’s 401(k) plan investments:
- Costs: What are the costs for employees to invest in the plan?
- Investment Strategies: What types of investment strategies are available? Are there both indexed and actively managed funds?
- Support: Who can employees consult for help with investment decisions?
- Advisor Guidance: Does your plan advisor regularly assist employees in optimizing their investment choices?
Opportunity #2: Excellent Service and Simplicity
While 401k plans can be complex, having a knowledgeable financial advisor aims to maximize the benefits for your employees. An advisor acts as a liaison between your company, employees, and third parties like the Third-Party Administrator (TPA).
When employees receive education and advice about their 401k, they are more likely to participate, aiding in compliance with non-discrimination testing requirements. Finding an advisor experienced in various plan types and regulations provides additional oversight, especially concerning compliance and future regulatory changes.
Questions to ask about your company’s 401(k) plan advisor:
- Industry Updates: Does your advisor keep you informed about industry updates?
- Review Schedule: Is there a regular schedule for reviewing the plan with your advisor?
- Communication: How frequently do you communicate with your advisor?
- Compliance Expertise: Does your advisor understand compliance issues and anticipate future challenges?
By leveraging these opportunities, your company can not only enhance the value of its 401k plan but also improve employee satisfaction and retention. Ready to optimize your 401k plan for maximum benefit? Contact us today to explore how we can assist you in achieving your retirement plan goals.
The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual. Integrated Financial Partners does not provide legal/tax/mortgage advice or services. Please consult your legal/tax advisor regarding your specific situation. This report is intended to be used for educational purposes only and does not constitute a solicitation to purchase any security or advisory service. Past performance is no guarantee of future results. An investment in any security involves significant risks and any investment may lose value. Refer to all risk disclosures related to each security product carefully before investing. Investment advice offered through Integrated Financial Partners, doing business as Konvergent Wealth Partners, a registered investment advisor.