In theory, 401k plans were always intended to be highly portable, but that’s not what happened. “Portability” only evolved to the extent that the most-attractive balances were picked off and rolled over to IRAs, and everyone else was left holding the bag.
Basic Members
Depending on what the plan sponsor decides to place on the 401k menu, plan participants might have an easier time dealing with making investment choices to battle the ravages of inflation.
It’s not just plan sponsors and plan participants that need convincing. The entire retirement plan infrastructure must also get on board. That doesn’t mean the hurdles can’t be overcome.
The decision to retain and service company retirees appears (at first blush at least) to be a no-brainer. But that includes a very important assumption.
If you think the web of fiduciary duties is complex in a 401k plan that focuses on getting employees to save for retirement, imagine how much more intricate it becomes if the plan also has to cater to retired employees.
It’s not a simple matter of flipping a switch and allowing cryptocurrencies in plans. Because these are alternative investments, the plan sponsor will need to learn enough about them to make an informed decision.
Fad topics come and go be a certain set of 401k concerns remain the same. What are they and why do they motivate plan sponsors?
“Perhaps the continued confusion can be expected given that the term ‘best interest’ is not defined in Reg BI and the word ‘fiduciary’ is not used in defining the new standard. It makes it harder to understand.”
In a nutshell, what was initially considered a “pick me because you like me” decision on the part of the prospect has been reframed as a “pick me because I sold you investments” decision. It’s a subtle distinction, but it drives the difference between a fiduciary act and a non-fiduciary act.
While diligence is to be applauded, that’s not to say you can’t carry it to an extreme. If fact, some folks are so hung up on fees, they sometimes fail to see the bigger picture.
