How do we design and administer retirement plans?
Basic Members
It’s not necessarily something that can be done at the flick of a switch, but it can be baked into the process.
If a company sees a substantial number of employees exit their firm, this can have a detrimental impact on all areas. Even the company’s 401k can be negatively affected in a number of ways.
I’m old enough to remember a world before the 401k. So distant was this anomaly in the tax code, that I, like nearly everyone else, was unaware of its existence, let alone its significance when it was formulated in 1978. What makes this more ironic was that it was my Congressman, Barber Conable, that led the way.
Here are five relevant lessons 401k plan sponsors can ask their service providers to show during employee education meetings.
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.
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.
Top 5 FiduciaryNews.com Stories in 2021 for the 401k Plan Sponsor and Fiduciary
Here’s the countdown you’ve been waiting for. Why do you think these particular stories were so widely read? What does that fact tell you about the interests of plan sponsors, their service providers, and retirement industry regulators?