Sponsored by Horizon Retirement Plans
A healthy 401(k) option is a valuable piece of your team’s total compensation package. Partnering with the right plan provider can make or break you. With a multitude of moving parts and complex rules to follow, creating and managing your retirement plan is a tough job that can leave you unsure of whether you are doing it right. Having said that, when you know what you are supposed to do and work with a team of providers that supports you and your team every step of the way, you gain confidence and feel like a hero. We went to brothers Andy and Bill Bush, Chartered Retirement Plans Specialistssm at Horizon Financial Group, to discover just what makes a 401(k) Superhero.
Create a clear plan document and follow it. There are a lot of options and features you can elect to put in your plan. The plan document details and defines those specific to your plan. Who’s eligible and when can they take loans, hardships? Are you providing a match? If so, what is the formula and the vesting schedule? Andy says, “The big key to having confidence about your plan is to know the features and provisions of your plan document, make sure it reflects what you value and make sure you follow it.”
Offer a diverse selection of investments. According to the Department of Labor, you must offer at least three diversified core investment categories, each with different levels of potential return and degrees of risk. Most plans easily meet this demand. With any funds you offer, make sure you document why those funds were selected and made available to participants. Also, make sure that you are continually monitoring those funds against their peers, be it quarterly or semi-annually.
Know how your plan measures up against competition. Andy explains, “Just like comparison shopping for a new vehicle, you need to see how your plan stacks up against its peers.” Confirm that the expenses of the plan are reasonable. As a fiduciary, your role is to act in the best interest of the participants (and their beneficiaries) and part of that is to make sure that your participants are not paying too much for the plan (investment expenses, recordkeeping fee, plan advisor fee and administration).
Deposit employee deferrals in a timely manner. This seems to be a no brainer, yet it is the most violated rule discovered in Department of Labor audits. Participant contributions must be deposited in the plan as soon as possible, but no later than the 15th business day of the month following the payday. If you have fewer than 100 participants, you have an even shorter time horizon.
Knowledge is power and the backbone of confidence. Your employees will have questions, so Bill suggests you choose a plan provider that will take the time and steps necessary to educate your team about the plan details, investment options and general retirement savings principals. Sending out the required notices meets the legal obligation, but when your provider takes the time to meet with your employees and discuss their personal investments, you achieve superhero status.