By gaining a solid understanding of basic plan design principles and parameters, you will be better positioned to offer up ideas on ways to effectively manage plan costs. For example, you can adjust the matching contribution formula under a 401(k) plan [2] to increase plan participation without incurring greater out-of-pocket costs. Here are some other ways in which you can maximize your and your employers’ retirement savings while limiting your expense:
Any overview of cost-control measures would be incomplete without a discussion of competitive bidding. And, since various plan providers excel in distinct products and market segments, it is possible that you will need to develop relationships with more than one primary plan provider.
Most effective advisors in the 401(k) arena consider it part of their role to help you get the best bang for your buck. And, since various plan providers excel in distinct products and market segments, you'll want to ensure you get the opinions of more than one primary plan provider. By exploring your options, you will learn about the strengths and weaknesses of various plan providers while finding the best possible solution for your business.
While the world of retirement is complex, technology is making it easier. There has been a tremendous shift toward automated plan features in recent years. Automatic plan features include:
You can typically choose whether to implement various automatic plan features. Implementing some automation features can lead to greater participation rates among your employees, higher deferral rates for yourself, and better investment decisions.
However, it’s important to remember automated features are only as good as the plan design features. For example, too low of a default deferral rate can result in employees contributing less than they would have voluntarily contributed, while too high of a default deferral rate can result in employees simply opting out of the plan.
There are several factors to take into account when considering your plan options.
It's good to have an understanding of all the costs that could be involved in setting up a plan. Costs will vary based on the type of plan you select, and not all listed below will be included.