Here’s the irony of the tax saving incentive. If it’s wildly successful and leads to very large retirement accounts, the required minimum distributions at retirement may place the now retired employee in a higher tax bracket than the one experienced while working.
Tag "401k"
You cannot understate the fiduciary aspect of lower fees. Most 401k plan sponsors, and especially those in smaller plans, don’t have the time or expertise to administer their company’s retirement plan. If they skimp on fees, are they also skimping on the fiduciary protection those professionals are supposed to provide?
This dilemma isn’t new. Trust officers have had to face it for generations. It’s called a “split-interest” trust. Multiply this split interest problem by the number of beneficiaries in a typical retirement plan and you can see how this conflict grows more complex.
The Biden Rule, like the Trump Rule, does not encourage or discourage the use of ESG criteria when selecting investments. This allows fiduciaries to either adopt ESG principles or ignore them.
Retirement plan sponsors may also benefit from teaching entrepreneurial skills to their employees. Such lessons could also provide employees with opportunities to begin to practice what they learned directly for their current employer.
From an employer perspective, it’s not just about the 401k plan. There are greater realities that must be dealt with. Different firms, however, will find distinct—and differing—realities.
It’s critical that plan sponsors consult with compliance professionals before adding the Deemed IRA feature.
Not only do you need to watch the place that holds all the money, you need to watch the pipeline that feeds the money there.
Let’s not just blame certification providers. Government agencies responsible for monitoring and enforcement are also responsible for market confusion and the dilution of the “fiduciary” standard.
The story arc of the 401k mimics that of software. Each release adds to and builds on features and benefits over and above those of previous releases.
