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T. Rowe Price, the mutual fund giant, recently completed a study which showed that participants should average 15% in contributions into their 401(k) plan accounts each year to achieve retirement readiness. Approximately three years ago, Alliance Bernstein conducted a similar study which came to basically the same conclusion.
Most Investment Committees spend the majority of their meeting time talking about things they can't do anything about.
Last week the Dow Jones Industrial Average reached record highs. Many expect the Standard & Poor's 500, a broader market index, to follow the Dow's lead soon. Is this a time to consider committing significantly to U.S. equities, or a time to take profits?
Probably you. The Securities & Exchange Commission (SEC) is moving forward in its quest to define who is a fiduciary for various client/adviser transactions.
Many employer plan sponsors are expressing a high level of interest in adding Roth 401(k) in-plan conversions as an option to their 401(k) plans in 2013. The recently passed Taxpayer Relief Act of 2012 made it possible for retirement plan participants to convert existing 401(k) plan balances to Roth 401(k) balances, whether or not the participant is distribution eligible.
Crafting an employee education policy statement can improve employee engagement and attendance in retirement planning education sessions, says columnist Robert Lawton.
Contributing Editor Robert Lawton outlines five steps to being a better retirement plan fiduciary.
At least once a year plan sponsors and/or other plan fiduciaries should take a critical look at their investment fund lineups. Eight items that are normally considered in a review include:
Every three to five years the Department of Labor would like you, as a plan sponsor, to review the providers that work with your retirement plan. As a fiduciary to your plan, you have an obligation to ensure that the providers you're working with are appropriate and that the fees that are paid for their services are reasonable. It's not required that you make any provider changes, but the retirement plan marketplace is very dynamic, and it's likely that when you conduct a provider review you'll discover some surprises. Here are some suggestions for managing a provider review process.
I have done a lot of 401(k) plan participant education sessions over the years. As a result, I may know your 401(k) plan participants better than you do (without ever having met them!). That's because I've found that most 401(k) retirement plans have four participant investor groups. These groups are: core-funds investors, index-funds investors, specialty-funds investors and target-date funds investors.
Simply stated, offering employees retirement education is the right thing to do. Retirement plans are complex and not easily understood by the average employee. More employees would participate in corporate retirement plans if they understood them better. If you are offering a 401(k) plan to your employees, but not sharing the value of the plan or how to use it properly, you aren't really committing to a solid retirement program.
This may be an excellent time to focus the majority of your annual employee education initiative on TDFs. After what happened in the markets in 2008 and 2009, plan participants may be listening more closely now.
Over the 25 years that I've spent consulting with plan sponsors about their 401(k) retirement plans, I've noticed that the best plans have all or most of these seven attributes:
Our clients often ask us to define who in their organizations are fiduciaries to their retirement plans and exactly what it means to be a fiduciary. Many times, our clients are surprised by the answers that they get. You may be as well.
On Oct. 14, 2010, the Department of Labor issued final rules related to the disclosure of fees to defined contribution retirement plan participants. This new rule is effective for plan years beginning after Nov. 1, 2011.
On July 16, 2010, the Department of Labor released an interim final regulation relating to the fees that must be disclosed by service providers working with ERISA-qualified retirement plans. All impacted service providers must comply with the new regulation by Jan. 1, 2012.
