The Frugal Fiduciary Blog

401k Plan Design Study: What 2,767 Small Business 401k Plans Are Doing

Posted by Eric Droblyen on Nov 30, 2016

Small businesses can have dramatically different goals for their 401k plan. While some want to maximize key employee contributions, others want to incentivize rank-and-file contributions.  401k fiduciaries have nearly endless options for meeting these goals – many with very different expenses. The process of matching 401k goals to available options is called 401k plan design.

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Topics: Plan Design, 401k Studies

401k Fees: Are Traditional 401k Services Worth a Smaller Retirement Nest Egg?

Posted by Eric Droblyen on Nov 16, 2016

I have a confession – my company’s participant benefit statements are nothing special.  While they disclose all the requisite information, they are matter-of-fact and lack color graphics.  They’re also delivered electronically, not mailed.

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Topics: 401k fees, Provider Shopping

You Want to Terminate Your Multiple Employer 401k Plan? Good Luck with That

Posted by Eric Droblyen on Nov 2, 2016

Small business 401k plan terminations can happen for reasons other than going-out-of-business or a business sale.  Sometimes, even successful businesses decide to terminate their plan due to a cash crunch or poor employee participation.

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Topics: Provider Shopping

Asset-Based 401k Admin Fees Are Unreasonable; Fiduciaries Should Avoid Them

Posted by Eric Droblyen on Oct 19, 2016

20 years ago, 401k plans were free. OK not really, but 401k providers used this lie a lot to sell 401k plans to small businesses that didn’t want to pay any out-of-pocket 401k fees. In truth, these plans paid “indirect” fees - like revenue sharing paid by mutual funds and/or wrap fees paid by insurance company variable annuities – to 401k providers based on a percentage of plan assets.   

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Topics: Revenue Sharing, 401k fees, Provider Shopping

3 Questions for Calculating Small Business 401k Provider Fees

Posted by Eric Droblyen on Oct 5, 2016

Small businesses have a fiduciary responsibility to pay only reasonable 401k plan fees. The problem? Too many 401k providers bury their fees in complex disclosure documents. When 401k fees are hard to find, it can be easy for 401k fiduciaries to pay too much for 401k services. When this happens, participant returns are handicapped unnecessarily and fiduciary liability is increased.

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Topics: Revenue Sharing, 401k fees, Provider Shopping

Government Shocker! The 401k Form 5500 May Become Useful Soon

Posted by Eric Droblyen on Sep 21, 2016

 

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Topics: Form 5500

Is Human 401k Advice More Expensive Than Robo Advice? You Might Be Surprised

Posted by Eric Droblyen on Sep 7, 2016

A new development in the small business 401k industry is the “robo” 401k provider. These providers use a computer algorithm, instead of a flesh and blood financial advisor, to construct investment portfolios for 401k participants. They claim technology is a less expensive alternative to human advice.

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Topics: 401k fees, Provider Shopping, Financial Advice

(Possibly) The Biggest Small Business 401k Fee Study Ever!

Posted by Eric Droblyen on Aug 24, 2016

Table with person working on 401k study

Meaningful 401k fee data is hard to come by – and that’s a big problem for small businesses. Sponsors of small business 401k plans have a fiduciary responsibility to keep 401k fees reasonable for plan participants. When this responsibility is not met, the consequences for 401k fiduciaries can be severe - including personal liability.

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Topics: Revenue Sharing, 401k fees, Provider Shopping, 401k Studies

401k Fiduciary Pro Tip: Uninvested Cash Can Be a Symptom of a Bad 401k Recordkeeper

Posted by Eric Droblyen on Aug 10, 2016

401k recordkeepers are like icebergs – you can only see a small fraction of the services they provide. Behind the scenes, they can process tens, if not hundreds, of transactions every day for a 401k plan related to contributions, distributions, inter-fund transfers or fee payments. This transaction volume makes 401k recordkeeping complicated, requiring specialized expertise to do it well.

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Topics: Fiduciary Responsibiilty, Provider Shopping

401k Enrollment: Is a Meeting or E-Delivery Best For Your Small Business 401k Plan?

Posted by Eric Droblyen on Jul 27, 2016

When a small business offers a 401k plan, its employees often need some sort of 401k education in order to make the two primary investing decisions applicable to 401k participation – “how much should I save?” and “where should I invest?”

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Topics: Employee Enrollment

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