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Retirement Plan Health Check

Creating a healthy retirement requires patience, planning, and partnering.

Patience is required because retirement is often far into the future. It is a long investment time horizon.

Planning is required to maximize the value at retirement. It works best when you are contributing consistently and for a long time. Selecting the right investment mix is different for everyone, based upon their tolerance for risk and how many years before they retire.

Partnering is required. Employers need to offer a qualified retirement plan (i.e. 401K, 403B, etc) for employees so their annual contributions can be higher than individual IRA’s. Employers can boost employee savings by offering a matching contribution. Employers can managed the cost of the plan administration and investment selections so the employees get a better investment return. Employers can sponsor regular retirement planning education session with their plan provider to help keep employees informed about the features of the plan and the importance of saving for retirement. Employees need to JOIN the plan AND contribute to the maximum extent they can.

Here are 5 TIPS for both employer and employees:

1. Employer – If you do not currently have a retirement plan in place for employees, meet with one or more plan providers to learn the steps required to set one up and what the costs will be. You may be surprised at how low the cost can be for providing this important employee benefit.

Types of Retirement Plans

Tips on picking a 401-k-plan-provider

2. Employer – If you already have a plan in place, meet with your plan provider to specifically review the annual fee disclosure documents. One is for fees paid for by the plan sponsor (your organization) and one if for fees paid by the participants (your employees). You can also discuss if any new or additional plan features should be considered. The plan provider should also be able to compare your plan costs to other plans with a similar number of participants and total retirement account balance.

401K Plan Fee Disclosures

3. Employer – Schedule a retirement plan education session. Perhaps a lunch and learn session so as to not impact everyone’s normal work schedule. Ask the plan provider or other investment professional to provide material on general retirement planning, general investment strategies, and be prepared to answer questions about your specific plan features and investment options.

5 Important Planning Steps for Retirement

4. Employer – Ask your plan provider if your plan is subject to the Department of Labor, Employee Retirement Income and Security Act (ERISA) requirement to “restate” (i.e. update your plan adoption agreement) no later than July 31, 2022. If so, when will it happen, what will it cost, and what changes may be required for your specific plan.

Retirement Plan Restatements (required)

5. Employee – Stay informed and stay involved. Read the Summary Plan Description. Read the annual participant fee disclosure. Ask to schedule a retirement planning session with the Plan Sponsor’s designated resource to get general advice and see if you are on track for a successful retirement!

Summary Plan Description.

Finally, there are several FAR Resource member companies that would be happy to talk with you about retirement plan options that best fit your organizations needs.

by Leslie D. Irby, CFP®, AIF®, Relationship Manager, Vice President, RPJ

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