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.
Tag "fiduciary"
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.
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.
“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.
Clearly, you wouldn’t pay more for 2 apples if you could get 3 for the same price, but would you pay more to get 2 oranges instead?
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.
Why I’m Thankful for the 401k
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.