Week 2: NEXT 10 WEEKS WILL TELL IF YOUR EMPLOYER 401(k) PLAN IS IN GOOD ORDER “CAN YOU MAKE THE BEST BETTER?”

 

I’m a big Pulp Fiction fan and I always enjoyed the scene where Jules takes the bite of the Big Kahuna Burger and exclaims, “uhmm hmm, this is a tasty burger!” His inflection announces that it might be the best burger he’s ever had even though he’s had some really tasty burgers. It brings to mind an analogy that I use in 401k educational meeting when we change funds or new providers.

What if I invited you to your favorite restaurant so that we could have your all-time favorite meal? What if when I picked you up I were right on time and when we drove there the restaurant was closer? What if when we got inside the maître d were nicer and the chairs were more comfortable and the bread was warmer and the waiter remembered your kid’s names? What if the wine were more refreshing and your favorite meal tasted better and the timing of the courses were perfect? And finally, what if, after all of this, when you received the bill, the meal were cheaper than ever before?

Would you attend the invite? That, of course is rhetorical. If you take the time, there are ways, even in a very cost effective, efficient plan to explore the performance, the cost, the fiduciary risk, the convenience and time management concerns and the legal and ethical obligations to your employees that can promote making even your apparently comfortable 401k plan better.

Consider addressing potential compliance concerns by knowing about a fidelity bond and adding an investment policy statement, fiduciary insurance and IRS filing, and record keeping requirements. Make your plan potentially more time efficient by coordinating your retirement and medical benefits with payroll. Give your plan a thorough cost analysis and understand what they are; know how much you TPA costs, know what revenue sharing is, how much do your invests really cost and what is the price for record keeping and a fidelity bond, oh, who is paying for all of this? Moreover, is the service you are getting from your TPA, your provider and your advisor appropriately suitable for your employees and yourself? Does your provider and your advisor provide the current technology, can they communicate with all of your people including you. Does your advisor have your best interest at heart?

If so, that burger is the best burger, if you don’t know, well there is a better burger out there.

See you next week.

Mike Mandel

This information was developed as a general guide to educate plan sponsors, but it is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.