The Frugal Fiduciary Blog

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: Investment costs, 401(k)

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, small business 401k, 401(k)

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: 401k enrollment, 401(k)

The Myth of the 15 Minute 401k Plan Setup

Posted by Eric Droblyen on Jul 13, 2016

Over the past year, several new Internet-based 401k providers have launched in the small business retirement plan market. Led by tech entrepreneurs instead of industry veterans, these providers claim to slash the time it takes to establish a 401k plan using new technology. One says they can deliver a 401k plan in just 15 minutes!

Here’s the problem. While technology might speed data collection and document delivery, it can’t reduce the amount of information 401k fiduciaries must supply a new 401k provider or guide 401k fiduciaries when picking 401k administration and investment options for their plan – the most time consuming steps in the 401k plan establishment process.

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Topics: 401(k)

John Oliver Should Be Upset; His Hancock 401k Fees Are Too High!

Posted by Eric Droblyen on Jun 29, 2016

Recently, John Oliver lambasted the 401k industry and his own 401k plan with John Hancock on his HBO show Last Week Tonight. If you haven’t seen this show segment, you should check it out now - it was educational as well as hilarious. John Oliver’s main beef with his company’s John Hancock 401k plan was its annual fees - 1.69% of plan assets + $24/participant – which he considered excessive.

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Topics: 401k fees, 401(k)

Safe Harbor 401k Plans: Answers To Common Questions

Posted by Eric Droblyen on Jun 15, 2016

“Safe harbor” 401k plans are the most popular type of 401k used by small businesses today. They automatically pass annual ADP/ACP and top heavy tests and allow business owners to maximize contributions to the plan. To achieve safe harbor status, owners are required to make a contribution on behalf of participating employees. For many employers, that trade-off is well worth the cost. Here’s why.

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Topics: 401k blog, safe harbor, small business 401k, 401(k)

401k Disclosure Rules Are Out of Date; It’s Time for Common Sense Reform

Posted by Eric Droblyen on Jun 1, 2016

It probably won’t surprise you to learn that government 401k regulations are often inefficient or ineffective. That’s too bad because superfluous regulation generally increases the cost of a 401k plan, which in turn, lowers participant returns.

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Topics: 401k fee disclosure, Fee Disclosure, 401(k)

What’s Old Is New Again: “Mega Back Door” Roth IRA Contributions Spark New Interest in Old School After-Tax Contributions

Posted by Holly Roussel-Godfrey on May 24, 2016

Ever hear of voluntary 401k contributions? If you are like most people, probably not. They are after-tax employee contributions like Roth deferrals, but subject to different ERISA rules. Voluntary contributions have been around decades longer than Roth deferrals, but are less popular – mostly because their earnings can’t be withdrawn tax-free at retirement like Roth deferrals.

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Topics: 401k blog, 401(k)

Plan Participation Problems? No Problem

Posted by Holly Roussel-Godfrey on May 10, 2016

You’ve made the decision to establish a 401(k) plan for your small business, but you’re concerned inertia or procrastination will prevent employees from using it. You know many workers think “I can’t afford to save much so there’s no point of saving at all” or “it’s OK for me to postpone savings because I’m not close to retirement.”

So how do you overcome these mental barriers or otherwise incentivize employees to participate in your new 401k plan? Two ways - education and plan design. Employees are more likely to participate today when they understand the cost of delay and when certain plan features are offered.

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Topics: 401(k)

Setting Up A 401(k) Plan: The Cliff Notes

Posted by Holly Roussel-Godfrey on Apr 26, 2016

Making hasty choices when setting up a 401k can cost your business, or your employees, tens of thousands of dollars in unnecessary plan expenses. For this reason, it’s important you hire a 401k service provider that’s not only reputable, but also consultative. If a provider tells you they can setup your plan in minutes – run. Setting up a 401k plan that matches your company goals simply can’t be done using pre-filled, signature-ready forms.

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Topics: 401(k)

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