Plan sponsors must begin taking their 401(k) and all qualified plans more seriously or the government will. This may sound like a threat, however if you could go back and do something to prevent the current health carewould you? Now is your chance with retirement plans.blockquote class=”posterous_long_quote”>So while all plans should be reviewed, there are some plans with more glaring problems than others. These plans may have symptoms that the plan isn’t running correctly and should immediately undergo a plan review.
- A plan where the third party administrator is not transparent on fees, especially when it comes to indirect payments they receive, such as revenue sharing payments from mutual funds.
- A company that has a profit sharing and money purchase plan that covers the same group of employees.
- A plan that has consistently failed their discrimination testing, whether it’s the tests for salary deferrals, top heavy, match or 410(b) participation.
- A defined benefit plan which is underfunded.
- A defined benefit plan for a company that has increased their workforce.
- Any plan with no financial advisor.
- A money purchase plan that is covering non-collectively bargained employees.
- Any 401(k) plan that has not reviewed their contract with their insurance company provider in the last 5 years.
- Any plan without an investment policy statement.
- Any plan that has not reviewed their choice of investments in the last year.
- Any plan that has not seen their financial advisor in the last year.
- Any plan without an ERISA bond and/or fiduciary liability insurance.
- A 401(k) plan with low participation or low average account balance per participant.
- Any plan that has not been updated in the last 2-3 years
This is a good guideline for plan sponsors to follow. Unfortunately many sponsors will delay or ignore this review until it is too late.
Please comment or call to discuss how a review would help your plan.
- You Pay More for Your 401(k) (401kplanadvisors.com)
- Why 401(k) Plans Are Doomed From The Start (401kplanadvisors.com)
- Regulations and Costs Shaping Future of 401k Plans According to FRC Study (401kplanadvisors.com)