How do we design and administer retirement plans?
Tag "retirement"
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.
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?
Once a person enters retirement, the number of scenarios proliferate. Unless the plan sponsor is a financial professional, it’s going to be a challenge to quickly comprehend all these options.
This isn’t to say younger employees should be left out of this type of education altogether. They shouldn’t. It’s important the message is drip, drip, dripped from the beginning of the onboarding sequence.
Before you scorn the use of badges, remember, the company match is the ultimate badge. If you meet a minimum savings goal, the company awards you a “badge” of a matching contribution.
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.