Employer Plan Services
Corporate 401(k) Planning Overview
Starting and maintaining a 401(k) can be a daunting process, especially if you are an HR or finance representative in charge of a company plan. There is pressure to set up the right structure for new hires and maintain ongoing participation as employees continue their careers with the company.
With so much onboarding paperwork to complete, an employee will often haphazardly fill in the baseline requirements, assuming that they’ll take a closer look down the line when they get a bit more settled into their new position. That time for a closer look often never happens, leaving a contributor with subpar investments and an employer assuming that their employees don’t care about planning for their future. Continued education ends up falling to the wayside, and responsibility is then neglected on both sides for the long term.
The person who oversees and makes decisions for their employees financial future have a requirement to establish and follow an investment policy statement (IPS) for every 401(k) plan that their company provides to its employees. This policy includes regular investment reviews to evaluate individual fund performance and to eliminate funds that are consistently underperforming. Regular reviews also offer an opportunity to review fund costs and fees, which can often lead to significant savings for employers.
For most corporations and companies, dollars are being left on the table. Employees aren’t getting the best possible return on their investment and employers are spending more money than they have to by not regularly reviewing their options. The HR or Finance Manager is overwhelmed with responsibility and therefore likely ignoring the options available to all parties, assuming that the funds themselves will balance out, correct themselves, or maybe hoping that no one will notice since retirement is “a long-term game”. All the while, the lack of action is hurting both the company and the employees who depend on the 401(k) to fund their retirement.