[A version of this article first appeared on FiduciaryNews.com. Once logged in to that site, you can view it here.]


Whether you are a plan sponsor or the participant who is saving for retirement, you are likely to have a question or two when it comes to 401(k) plans. Here are a few of the most frequently asked questions that 401k plan sponsors and participants ask and the ones that they should be asking:


Questions Plan Sponsors Usually Ask:


How do we reduce the fees of the plan?

They ask this because fee compression is a big trend in the industry, yet disclosures are difficult to understand. But they aren’t always looking to decrease participant fees. We talk to plan sponsors, almost daily, that are looking to allocate all plan administration costs to the participants.


Questions Plan Sponsors Should Ask But Don’t:


What could I do better for my employees?

The first question should always be “How could I best promote the best interest of the beneficiaries of the plan?” Plan sponsors should also be asking, ‘What can we do to improve the plan for our participants?’ Many executives and HR Managers are not fully aware of the changes and trends in the industry that they could incorporate to improve their plan. Such advancements include fiduciary services, robo-advisory, financial wellness, or even plan design features such as automatic enrollment and automatic escalation.


How much liability do I have?

Plan sponsors should be asking, ‘What liability exists for the employer and executives in sponsoring a plan, and what can be done to mitigate that liability?’ Many employers do not understand fiduciary roles and responsibility.”


Questions Plan Participants Usually Ask:


How can I withdraw my savings?

Too many participants are asking how and when they can withdraw their retirement savings. There are a few factors that play into this. 1) The culture of America has grown to be more about the here and now than about the future. 2) A growing distrust of the economy, markets, and government makes participants want to get it back into their own hands. 3) It is becoming increasingly common for employees to change jobs more often which means they need to move assets from one plan to another more frequently.


How should I invest my funds?

In some studies, up to 80% of participants have reported being confused by investment options. There is a lot that goes into building a simple, yet sophisticated investment lineup that can reduce confusion while improving outcomes, but when an expert in a conflict-free plan is tasked with doing just that, it can dramatically reduce this pain point for participants.


Questions Plan Participants Should Ask But Don’t:


What does the future hold for me?

Participants should be asking, ‘How much do I need to save to retire comfortably?’ or ‘What can I give up now in order to save more for my future?’ The average savings rates are far lower than the expert recommended savings rates which is dangerous considering the state of social safety nets.


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Spencer is currently the Chief Operating Officer for BenefitGuard. He joined BenefitGuard after receiving his MBA from Westminster College. He previously worked as a business consultant for several reputable law firms and start-ups throughout northern Utah. His passions include: business, investing, politics, economics, golf, college football, and family.

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