5 Articles that Define the Most Important Issues for the 401k Plan Sponsor and Fiduciary
Our previous article (“5 ‘Must Read’ Articles for the 401k Plan Sponsor and Fiduciary,” FiduciaryNews.com, December 30, 2014) proved far more popular than expected. What made this more amazing was that it was published during the “quiet” week between Christmas and New Years. It’s all the more pleasing then, that we can announce, in the spirit of those great late-night infomericals, “But, wait! There’s more!”
Remember how we counted down in the previous article? In that piece, we stopped at #6. Many of you guessed correctly that we were holding out on the top five “evergreen” articles. This represents the core content 401k plan sponsors and fiduciaries continue to read. Can you tell why? These articles outline the most important issues faced by retirement plan specialists. Don’t be surprised if the priority of that importance rises as the numbers next to the articles approach #1. In fact, the top two articles are both about the same topic. Care to guess what it is? Here they are in reverse order:
#5: “The Best Way 401k Plan Sponsors Can Benchmark Their Plans” – Here’s a question every 401k plan sponsor and fiduciary will at some point ask. And why not? It really speaks to the core of their mission. The article features comments from three different industry sources, all experienced in the field of 401k plans and various benchmarking techniques. What’s more, they each come with a unique perspective on the issue. Mind you, while this article offers a great overview on the subject, this particular field is highly evolving. There is no consensus on the most appropriate benchmarks in part because government regulators haven’t joined the discussion. Still, this article is good because it focuses on fundamentals, including whether or not to outsource this function.
#4: “5 Fiduciary Facts the DOL Wants Every 401k Plan Sponsor to Know” – The headline says
“Five” but, if you count the bonus fact at the end, there are really six. The beauty of these facts is that they come directly from the Department of Labor, the Executive Branch arm in charge of regulating 401k plans. Each fact is fully explained in a detailed fashion only a government wordsmith can pen. The six facts include: Fiduciary Responsibilities; Basic Responsibilities; Limiting Liability; Hiring a Service Provider; Prohibited Transactions and Exemptions; and, Bonding. OK, the bonding one is pretty short, but what do you expect from government work? In either case, the list represents an easy starting point for all 401k plan sponsors and fiduciaries.
#3: “Fact or Fiction? Slaying the Myth of the 401k Tax Advantage Myth” – If you ever lose faith in the tax saving power of the 401k (or IRA or similar tax-deferred contributory retirement account), then you need to read this article. It’s like a booster shot. It’ll reaffirm your belief in the foundational attraction (and success) of tax-deferred saving. In the process, you’ll regain your confidence in the 401k and seriously begin to question all those naysayers. What’s more, the tables of tax savings will show you the raw numbers. The most amazing thing about it? It proves not only does the retirement saver gain from tax-deferred saving, but the government ends up with more tax revenues. Don’t believe in this win-win scenario? Then read the article to see how easy it is to prove it.
#2: “What’s a Fair Fee to Pay a Fiduciary” – Having trouble distinguishing between the wide range of fees offered by investment advisers? This is an excellent article for you. It clearly explains the different types of investment adviser services and why these different types of services charge different levels of fees. The article ends with three instructive rules of thumb every 401k plan sponsor and fiduciary must abide by.
#1: “What is an Appropriate Fee that a 401k Plan Should Pay?” – Unlike the above article, which focuses just one element of the 401k complex, this is the grand-daddy of them all. If you want to know the law of the land when it comes to 401k fees, this article offers a comprehensive guide. It’s all there, from the typical averages based on the size of the plan to the problems and issues of small plans in particular. The article is broken up into four sections including: 1) Why plan sponsors can’t look to the DOL for help; 2) Average 401k fee ranges; 3) Special notes for small plans; and, finally, 4) A look at what matters most to the 401k fiduciary. Each section contains one or more links to other, more in depth, articles. This is THE “Must Read” article for every 401k plan sponsor and fiduciary.
It might interest you to know that, of all the Keyword searches that led readers to FiduciaryNews.com in 2014, 8 out of the top 10 dealt with fees in some way. Perhaps the reason why fees are most important is because, for all the mandatory disclosure, there’s still a foggy aura about them. Hmm, come to think of it, it might interest readers if some publication attempts to lift that fog…
If you’d like to discover other important topics confronting 401k fiduciaries, then you’re invited to explore Mr. Carosa’s book 401(k) Fiduciary Solutions and discover how to solve those hidden traps that often pop up in 401k plans. His forthcoming book Hey! What’s My Number? – How to Improve the Odds You Will Retire In Comfort will be available later this year.
Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada.