We’ve been saying it for years—in order to advance American workers’ retirement security in a major, tangible manner, the government probably needs to intervene in one way or another. The conversation began years ago with state-mandated auto IRAs and recently turned to Multiple Employer Plans (MEPs) and Required Minimum Distribution (RMD) regulations when President Donald Trump signed a new executive order aimed at enhancing retirement security in America.
Artificial intelligence may be all the rage in this day and age, with multiple reports coming out on a seemingly daily basis highlighting the benefits of AI on both professional and personal levels. But before we had artificial intelligence, we had automation. Automation has improved (and has continued to improve) our world in multiple ways. Think about it—automation crept into our lives in a subliminal manner but has since come to play a pretty big role in our lives, whether we realize it or not. Automatic doors open for us when we’re ready to enter or exit a building, regardless of how full our hands are. Automatic walkways ease some of the stress we feel when trying to make our gate on time in a crowded airport. And automatic reminders for things like oil changes and doctor appointments simplify our chaotic schedules and keep us on track with our day-to-day responsibilities.
Wouldn’t it be nice if there was a tool that could do the same thing when it comes to safeguarding our financial future? Simplify the savings process to better keep us on track to reach our long-term goals? Well, implementing automatic enrollment for your company’s 401(k) or similar retirement plan can do just that for you and your employees.
A recent study by the Betterment for Business uncovered confusion, fiduciary responsibility, fees, and education as ongoing issues surrounding retirement savings and retirement savings accounts. And while this may be an accurate assessment, it’s certainly not a new revelation for anyone close to the market or industry. The article goes on to discuss how digital resources could be a potential fix to all of these concerns, yet they don’t reference any human interaction. But why would a plan sponsor want to run something as human-centric as a retirement plan using non-human “robo advisors?”
As a small business owner, offering a company-sponsored 401(k) plan that your staff can contribute to kills two hypothetical birds with one stone; you’re offering a high-value employee benefit that will help attract and retain talent and you’re keeping business expenses relatively low. Plus, as you’re probably already aware, implementing a company-sponsored 401(k) plan can help your business save on taxes. But how much and for how long?
With the rash of recent lawsuits surrounding excessive 401(k) plan fees, many in the industry are questioning how we got to this place. Between inexperienced plan sponsors neglecting fiduciary responsibility and detailed plan scrutiny performed by financial advisors and legal counsel alike, it’s a bit of a perfect storm.
As a responsible plan sponsor, you may occasionally wonder if there’s a different retirement plan provider that’s more beneficial to your employees and your organization. Before you do any legwork, and certainly before you make any decisions, it’s important to formulate a game plan because no two plan providers are exactly alike, and there are no “cookie cutter” solutions.
There are a lot of Americans saving in 401(k) plans. Like, a lot. Roughly 54 million Americans hold an estimated $5.3 trillion in assets in 401(k) plans, and that number is on the rise . That’s a lot of plans, holding a lot of money, all relying on some level of specialized services with associated fees to keep them running smoothly. From consulting and advising to recordkeeping and administration, these fees ensure that a business is compliant and investments are appropriate. But how do you know if the fees you are being charged for your 401(k) are reasonable?