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Friday, August 7, 2020

Why Plan Sponsors Should Pay More Attention to Their Retirement Plan Design

The key point in your benefit plan’s success is in its design. And if your company hasn’t thought much about it, it might be the time for you to consider a thorough analysis to see how well your current plan is designed. There is no such thing as a universal plan design, as there are many different configurations and types, based on a wide range of factors and demands.

According to a recent Forbes article, all of the high-performing plans in their survey had the following key plan characteristics in common:

  1. High participation rates: Nearly all employees were involved the best performing plans (95%) while other plans had less than 80%.
  2. Smart investment options: Almost all of these plans offer cheap index funds, managed accounts, and Roth options.
  3. Auto-enrollment and auto-contributions: The best plans have automatically enrolled employees in their plan
  4. Financial education offering: The majority of companies nowadays provide their employees with a financial wellness programs in addition to their plan design. Plus, more than a half provided advice on college credit, savings, and debt management.

According to Forbes, you should definitely consider the following actions:

  • Refer to a low-cost provider for an advice, in order to get additional help in building features into your 401(k) plan design.
  • Check all the investment options in your retirement plan in terms of fees. As a fiduciary you are responsible for the paid fees and fund selection.
  • Ask for advice: get as much information on your retirement plan design as you can. Check the most recent information with your service providers.

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