The Frugal Fiduciary Blog

Roth 401k Deferrals — Answers to Common Questions

Posted by Eric Droblyen on Jan 25, 2017

In a 2016 401k plan design study of 2,767 small businesses, we found 66% permit participants to make after-tax Roth deferrals to their personal account. I think it’s safe to assume the high adoption rate of this 401k plan feature is due to participant demand.

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Topics: small business retirement plans, Roth 401k, small business 401k

4 Traits of the Best Small Business 401k Providers

Posted by Eric Droblyen on Jan 11, 2017

There are thousands of 401k providers in the U.S. – many with very different fees, services and expertise. This abundance of choice can make choosing a competent 401k provider with reasonable fees seem overwhelming for small business 401k fiduciaries.

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Topics: small business retirement plans, small business 401k, 401k service providers

401k Eligibility: When to Let Employees Join Your 401k Plan

Posted by Eric Droblyen on Dec 14, 2016

During the 401k plan design process, we get a lot of questions from small business 401k fiduciaries about employee eligibility.  They want to know when they should let new employees into their 401k plan and their options for keeping certain employees – generally the ones that won’t participate – out.

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Topics: 401k plan participation, small business 401k, 401k plan design

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: low cost 401(k) plan, 401k fees, small business 401k

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: 401k enrollment, Multiple Employer Plans, small business 401k

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)

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)

Small Business Retirement Plan Options: 401ks vs. SIMPLE and SEP IRAs

Posted by Eric Droblyen on Feb 10, 2016

Defined contribution (DC) plans, such as 401(k) plans, are the most popular type of workplace retirement plan in the United States today. According to Department of Labor statistics, there are 633,021 DC plans in the U.S. (516,293 of which are 401(k) plans), covering more than 90 million total participants.

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Topics: retirement plans, small business 401k

401k Document Retention Rules Made Simple

Posted by Eric Droblyen on Oct 7, 2015

Did you know that ERISA requires all employers to retain detailed 401k documents, including testing results, transactions and employee activity – for at least 6 years? If you did not, you’ve got a lot of company. Nevertheless, it’s important to understand and comply with these rules. While only small civil penalties are possible if required plan records are not preserved, missing records can make it more difficult for a 401k sponsor to defend plan operations or the accuracy of benefit payments if they are ever challenged by the IRS, DOL or plan participants. That can increase liability.

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Topics: small business 401k, 401(k)

DOL’s Fiduciary Rule Advances to OMB; Not Everyone is Happy about It

Posted by Eric Droblyen on Mar 4, 2015

On February 23, 2015, President Obama announced that the long-awaited redrafting of the DOL’s “fiduciary rule” was being submitted to the Office of Management and Budget (OMB) for review. This rule, also called the “conflict of interest rule for investment advice,” would subject all financial advisors who provide investment advice to retirement plans to a fiduciary (conflict-free) standard of care.

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Topics: fiduciary, 401k blog, small business 401k, DOL

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