Time To Look Under The Hood

If you’ve ever had a car, you well know that it’s best not to wait until things are clanking and grinding to check under the hood. A thorough regular tune-up goes a long way toward preventing emergencies. The same is true for the company sponsored retirement plan: even if it seems to be purring along, it’s wise to link arms with a Certified Public Accountant, as well as your plan advisor and administrator to give it a thorough review.

How’s Your Retirement Plan Really Doing?

Employee needs and expectations shift, regulations change, and new investment possibilities become available. All of these dynamics point to the importance of periodically giving your 401k a thorough tune-up, as TNJ Retirement Partners encourage:

Retirement plans aren’t “set it and forget it.” Even the most carefully crafted plans need a little TLC from time to time. Laws evolve, fees slowly creep up, and your business priorities may shift. That’s why… a complete “Plan Tune-Up”, a deep, strategic review that goes beyond compliance checklists and turns your retirement plan into a genuine business asset. Think of it as taking your plan in for a full diagnostic, not because it’s broken, but because it can run better and further with a little attention … .A “Plan Tune-Up” isn’t just a box-checking exercise; it could be a strategic overhaul. This kind of in-depth review uncovers opportunities, eliminates inefficiencies, and ensures your plan supports both your people and your business goals. Done right, it turns your retirement plan into a competitive advantage for attracting and keeping great talent.

Ideally, a deep retirement plan review involves the plan sponsor (typically the business owner), along with the CPA (Certified Public Accountant), and TPA (Third Party Administrator), collaborating to look at how the plan might do even better for participants, and strategize about changes for the go forward. Specific areas to focus on when reviewing the 401k are: 

• Plan Design Efficiency

Are your owners and key employees hitting their savings potential? …Review contribution limits and design features like safe harbor, profit-sharing, or cash balance components that can boost savings and reduce taxes. Strategic tweaks today can produce stronger results for years to come.

• Fee and Vendor Benchmarking

Plan costs have a way of creeping up quietly. Benchmarking your vendors and fees keeps your plan competitive and demonstrates sound fiduciary management. You might uncover ways to improve service and reduce costs, a win for both you and your participants.

• Participant Outcomes

Participation and savings rates tell you a lot about plan health…. Explore… auto-enrollment and auto-escalation, and ramp up participant communication and education….

• SECURE 2.0 Enhancements

The SECURE 2.0 Act opens the door to some new features like Roth matching, student-loan matching and expanded catch-up options. These options can help make plans more flexible and more appealing to a multigenerational workforce. 

Give Your Protections A Tune Up Too

Risk management professionals remind plan sponsors that it’s imperative to take decisions about investment menus ever more seriously, as private equity investment opportunities hit the market. For example, Richard Clarke, national risk management expert, and chief insurance officer at Colonial Surety Company, points out that although new asset classes may yield high rewards, they are also accompanied by rising risks “due to their higher fees, liquidity strains and less established nature.” Indeed, amidst the swirl of information about new options for 401k plans, Clarke observes that one thing seems certain for the employers who sponsor plans—-increased uncertainty and complexity to manage.

Unforeseen challenges to retirement plans arise all the time, and seemingly small decision-making oversights can turn out to be very damaging for retirement plan sponsors. On average, resolving an ERISA claim, even if nothing has been done wrong, costs a small business over $1.2 million. That’s why Colonial Surety Company offers a convenient and affordable package, created especially to help plan sponsors mitigate their rising risks. Armed with our Fiduciary Liability Insurance, for a few dollars a day, you’ll have defense costs and penalty limits up to $1,000,000 if faced with alleged or actual breaches of duty in connection with the employee retirement plan. Plus, we include cyber liability insurance at no extra cost, providing additional protection–for the plan and company–against regulatory actions related to data and privacy, as well as expert response services.

Get Protected, Efficiently and Affordably, Right Here: 

Fiduciary+Cyber Liability Insurance for Retirement Plan Sponsors

Serving customers since 1930, Colonial Surety Company is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time. Colonial Surety Company is rated “A Excellent” by A.M. Best Company, US Treasury listed, and in business all across the country.