401K plans are perhaps the most popular retirement savings options for employees & employers in the United States. So it is imperative for plan advisors and sponsors to educate plan participants to avoid litigation and ensure compliance with ERISA, DOL, and other statutory regulations.
These regulations require that plan participants are given adequate information about their retirement savings options and the fees associated with them. By providing education to employees, plan sponsors and advisors can show that they are meeting these regulatory requirements and thus avoiding potential liabilities.
Another benefit of providing employee education in 401K plans is that it helps to increase employee participation in the plan. When employees are provided with clear and concise information about their retirement savings options, they are more likely to participate in the plan and make informed decisions about their investment choices. This can lead to higher participation rates and achieve better retirement outcomes for employees.
However, not providing the necessary education to plan participants can lead to possible pitfalls or liabilities for plan sponsors and advisors. For example, if employees are not provided with adequate information about their retirement savings options and the fees associated with them, they may make poor investment decisions that could negatively impact their retirement savings and expose plan fiduciaries to potential risks, penalties and liabilities.
Additionally, if employees are not provided with education about their rights and responsibilities under the plan, they may be likely to report or pursue potential violations or fraud.
One effective solution for participant education, offered by Rixtrema, is the Retire Risk feature on its Portfolio crash test application. This feature allows advisors to stress test participants’ individually elected fund lineup for various market scenarios and estimate the value of their retirement savings at the end of their retirement period.
Additionally, the 401K Fiduciary Optimizer also enables advisors to recommend lower fee alternatives to the 401K plans fund lineup, potentially saving participants thousands of dollars.
With Rixtrema’s tools advisors can provide employees with clear information about their retirement options and empower them to make informed decisions.
To see a demo of Rixtrema’s products click here.