How do we design and administer retirement plans?
Tag "ERISA"
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.
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.
“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.
Plan sponsors can benefit from motivated employees, and the 401k plan is a tool to achieve this motivation. What precisely can plan sponsors offer in addition to the usual company match to make their 401k plan more enticing, more attractive, more motivating?
When is a “problem” not really a problem? And what can be better than success, even if no one knows about it.
While some may consider this heresy, the best option for a fiduciary managing a portfolio is to include a consistent percentage of assets outside the equity markets and in assets that preserve capital.
Exclusive Interview: Larry Starr Explains “Galactically Stupid,” 3% Math, and More!
Interested to know why small plans are different? What the dumbest retirement idea in the past 10 years was? What the most successful concept was? Read all about it in this article.