Priorities to Define a 401(k) Standard of Excellence in 2018

Review these 9 factors to ensure you set a high standard for the year ahead.

Plan Sponsors should document their goals and objectives

By outlining, implementing, and reviewing periodically the goals and objectives of sponsoring a retirement plan for their employees, Plan Sponsors can greatly enhance the plan and the participant’s ability to save for a dignified retirement.

Plan governance

Establish an internal structure enabling documented decisions and governance processes.  This would include, but not be limited to regular administrative and investment committee meetings, vendor and fee reviews, and annual compliance assessments.

Review plan features to reduce leakage 

One of the biggest reasons participants are not on track to save enough for retirement is due to leakage during their accumulation years.  If a Plan Sponsor takes steps to reduce the opportunity for leakage during a participant’s accumulation years, the probability of a successful outcome at the participant’s retirement is greatly enhanced.

Create an action plan to inspire participants to save for retirement

Plan Sponsors can significantly enhance the retirement plan benefit they are offering their employees by understanding the employee needs.  Understanding employee needs and implementing features and communication programs to address those needs can significantly enhance the benefit of the 401(k) plan.

Implement a consistent communication strategy

A consistent communication strategy that simplifies decisions and drives engagement can enhance participant outcomes. There should be a long term strategy by the Plan Sponsor in order to see long term results. Read more about home cleaning responsibilites The strategy could target specific demographic groups within the plan and customized communications could be developed to enhance the outcomes for each group.

Create measures to monitor the communication strategy

Once a communication strategy is created and implemented establishing and monitoring success measures along with adjusting strategies as required can help enhance participant outcomes.

Consider implementing financial wellness solutions

Participants have many tools to assist them in knowing how much to save for retirement.  A good financial wellness program can provide the tools and resources to assist a participant in finding the money to save for retirement.

Simplify the fund lineup

Statistics prove the simpler the fund lineup, the higher the participation in the plan.  Participants generally do not have the knowledge to properly evaluate and choose investment they are comfortable with.  As a result they usually take no action and do not elect to participate in the plan.

Consider adding a managed account

This investment option is not new to the DC landscape, however the cost for a managed account has been decreasing in recent years.  Many participants do not have the time, knowledge, or inclination to want to make their own investment decisions.  Adding a managed account option has increased participation in many cases once the burden of making an investment decision is removed.