It’s that time of year again when employers should be reviewing service providers and benefit plans for the New Year. One that should not be overlooked is your 401(k) plan. Employers that offer a 401(k) plan have a fiduciary responsibility to ensure their company-sponsored plans have reasonable fees and expenses.
With that said, here are a few things employers should review:
Over time, plan administration fees can take a serious toll on a participant’s account balance. Most Americans do not know they pay fees for their 401(k) plan. Perhaps equally disturbing, many employers are also in the dark. Be sure that you are asking about these fees and comparing to others each year. Check out the staggering statistics in the infographic below.
When reviewing service providers, be sure to consider the number of plans and types of plans, so you are able to offer a diverse portfolio of mutual funds. Ask about Index Funds versus Actively Managed Funds and Target Date versus Risk-Based Funds. It is important to offer a professionally-managed investment option, like Target Date Funds. Participants that have little time, interest, or knowledge about investing usually prefer Target Date Funds.
With the increased scrutiny regarding retirement plan investments and administration under ERISA, many plan sponsors are seeking ways to minimize their fiduciary liability. Confirm your investment adviser is acting as a fiduciary and is regularly reviewing investment options, regulations, and more with you.
If you’re interested in comparing your 401(k) plan with others, download this brochure to learn more about Retirement Plan Services through Payentry.