Shopping Your Plan Ensures Lower Costs For Your Plan Needs

by LifeInc Retirement Life,Inc.Retirement Services

Employer-sponsors are beginning to realize that it’s not our parents' 401(K) Plan anymore. Long gone are the days of simply setting it and forgetting it. Increased regulatory oversight of 401(k) plans by the Department of Labor has led to raising the bar in sponsor fiduciary responsibilities along with the penalties for falling short. Many employer-sponsors are catching on and are earnestly trying to implement the DOL’s checklist of fiduciary duties. With the proper context, however, sponsors can gain additional benefits by instituting a regular fiduciary review process every few years.

As plan fiduciaries, it is your responsibility to ensure that the costs associated with your 401(K) Plan And Investments meet the standard of “reasonableness” established by the DOL. A fee disclosure review offers the opportunity to consider how your plan is performing in terms of expenses and investment performance. If you are paying too much relative to the level of service you are receiving or the investments are performing poorly relative to their costs, you could be breaching your fiduciary duties. Equally important, your plan is most likely not meeting its objectives, which can lead to lower participation and contribution rates.

For both plan compliance and optimal participation your plan should be compared with other, similarly sized plans to determine:

• How your costs compare

• Whether your costs are reasonable relative to the level of service received

• If the plan’s investment choices are diversified and suitable enough for your participants

• If the plan is performing as well as other plans

By benchmarking these cost and performance factors, you can regularly review them to determine if any adjustments are needed to improve your plan’s success.

Staying Current with Technology

Plan administration technology is a major determinant in how efficient your processes are. Greater efficiency lowers cost and improves plan effectiveness. Each year, there are enough incremental changes or advances in technology to warrant a review that would determine how much efficiency could be gained by upgrading your systems or software.