Best Practices for Retirement Plan Management

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As I mentioned in last week’s blog, running a 401(k) plan is a lot of work that is marked by several complex tasks and timelines. Therefore, this week I thought it would be helpful to highlight some of best practices for 401(k) plan management.

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If you have any questions about how to implement these practices in your business, please give me a call at 205-970-9088 or email me at jamie@grinkmeyerleonard.com.

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Three Major Reasons Your 401(k) Plan Matters

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Hours of work goes into managing and administering your company’s 401(k) and at times it may seem like a mountain of work for a molehill of appreciation. However, as someone who spends every day working on 401(k) plans, I am here to tell you that they matter – a lot! They matter to your company, your people, and you.

1. The 401(k) plan offers your employees a powerful savings vehicle
The 401(k) has many qualities that make it an attractive option for savers. High deduction limits (in 2017 employees under the age of 50 can contribute $18,000, those over 50 may contribute an additional $6,000) allow employees to save a significant amount into their 401(k) through simple payroll deductions; Roth options allow employees the ability to choose whether to be taxed now or taxed later; and features like automatic enrollment and automatic deferral increase allow employees to begin and increase their deferral amounts without proactive action.

2. 401(k)s can be a more financially prudent choice than a traditional investment account
Despite the confusion surrounding 401(k) fees, there are times when a 401(k) can be a better financial choice than an Individual Retirement Account. Due to the size of 401(k) plans, they may have access to shares of investments that may not be available to individual investors. This can lead to lower investment expenses. Additionally, 401(k) plans may offer access to a financial adviser who can provide financial education to you and your employees for no additional cost.

3. 401(k)s can lead to happier, more loyal employees
In the 2017 Workplace Benefits Report published by Bank of America, they found that 31% of employees selected a 401(k) plan as their top employment benefit, second only to health benefits. This same survey found that employee’s number one financial goal was saving for retirement. Furthermore, a study conducted by Lockton Retirement Services and detailed in the report “Finding the Links Between Retirement, Stress, and Health” found that 52% of respondents reported that having a retirement savings plan helps ease financial concerns “a great deal” and an additional 43% said it helps “a little.” Additionally, those employees with access to a retirement plan in which the employer contributed to the plan reported higher levels of job satisfaction and lower incidents of physical ailments. Therefore, if your company offers a 401(k) plan that can help employees save for retirement and reduce stress, it seems highly likely that those same employees will be happier and more loyal to your company.

Your employees look to your company to help them to save for retirement. If you do not think that your current plan is achieving that goal, please call me at 205-970-9088 or email me at jamie@grinkmeyerleonard.com and I will get to work for you today on developing a plan that works for your company and its employees.

 

4 Tips to Make Your Plan Conversion Go More Smoothly

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For retirement plans that are eyeing a year-end conversion or any transition in the near future, here are four tips to help make the conversion process go as smoothly as possible.

1. Make Sure Everyone is on Board

In my experience, many times the person that has the final say in deciding whether to hire or fire a service provider is not usually the same person in the company that works directly with the provider. Therefore, before making the decision to pull the plug on a provider you need to ensure that all members of your team are on board. Ask your team questions like, “What does ABC provider do that makes your life easier?” or “What is something that you wish ABC provider did better?” Once the decision has been made to make a change, make certain everyone is involved from day one.

2. Ask for Specifics

We all know that often times what we are sold and what we get don’t exactly match up. For this reason, it is important to ask your sales representative to give you specifics on what your plan conversion will look like and better yet, ask them to involve your service representative from the very beginning of the process. Get the details on payroll upload file feeds, distribution processing and timing, blackout periods, and service standards.

3. Tie Up the Loose Ends at Your Current Provider

The old saying “garbage in, garbage out” applies here. More than likely, you chose to convert your plan to a new provider because something at the old provider was broken; so, don’t bring that broken process or bad data to your new provider. Items that can be an issue in a conversion are outstanding loans, participant vesting information, automatic enrollment start dates, and more.

4. Control the Message to Your Participants

You may be excited to get a fresh start at a new provider, but keep in mind that change is hard, especially on your participants. They will have to learn a website and memorize a new call center number and they probably had absolutely no say in whether or not to make the change. The blackout period can also cause uneasiness among participants since there will be a time that they will not be able to access or even see their account balances. Therefore, make sure to get ahead of any unrest by controlling the messages they receive from you and the new provider.

There is so much that goes in to a successful plan conversion. If you would like to discuss these tips and many more, please contact me at jamie@grinkmeyerleonard.com or 205-970-9088.