Christine Hradsky No Comments

DOL Pitches Auto-Portability Program to Preserve Retirement Savings

Auto-PortabilityThe U.S. Department of Labor (DOL) is advancing a proposal that would enable 401(k) plan sponsors to automatically transfer account balances up to $5,000 of former participants who have left the company. The amounts would be transferred to the 401(k) plan of an employee’s new employer. Assets transferred using this “auto portability” approach would make an intermediate pit stop in an IRA before landing in the former employee’s new employer’s plan. Here’s what you need to know. Read more

Christine Hradsky No Comments

Retirement Plan Sponsors: Is Cyber Security Part of Your Fiduciary Duty?

Fiduciary Duty

Everyone in this era needs to be cautious when it comes to cyber security, none more so than employee benefit plan sponsors.

We’ve all received suspicious-looking emails asking us to provide personal information to redeem a prize that we’ve won or alerting us that someone we know needs financial help. By now, most of us recognize these scams—and don’t open the email.

But what if the message looked like it was coming from an official, known source? Would you open an email you thought was coming from your 401(k) service provider or the sponsor of your retirement plan? Read more

Christine Hradsky No Comments

Fees for 401(k) Services: What Plan Sponsors Need to Know

Fees 401(k)

Avoid having the gavel come down on you by being well aware of the fees associated with your employee benefit plans.

Political candidates who don’t know the cost of a gallon of gas or a movie ticket usually wind up paying that price with voters and losing on election day. Likewise, many plan sponsors are finding themselves on the losing side of lawsuits because they allowed their defined contribution plan to pay unreasonable service fees. Read more

Christine Hradsky No Comments

Should Your 401(k) Plan Adopt An Auto-Enrollment Feature?

401(k) Enrollment

Many employers have 401(k) plans with a low participant percentage. Current tax rules make it easy for organization to automatically enroll employees, helping them save for retirement.

Current tax law gives employers encouragement to start automatically enrolling employees for tax-saving 401(k) elective deferral contributions (also called salary reduction contributions). The Pension Protection Act of 2006 removed perceived state-law restrictions and made other changes.

The end result of these changes: Companies adopting auto-enrollment features will have more employees participating. Larger allowable salary reduction contributions can likely be made for higher-paid employees, because lower-paid workers will be contributing more.

Read more

Christine Hradsky No Comments

Uncashed Distribution Checks: Best Practices For Plan Sponsors

Distribution Checks

When employees leave, it can be difficult for benefit plan sponsors to know where to send their information. Follow these best practices for handling such situations.

Defined contribution plan sponsors face numerous challenges when workers change jobs, and the Department of Labor (DOL) is paying close attention to how employers are dealing with these situations.

Often, outgoing workers don’t provide instructions or forwarding information, leaving it up to the plan sponsor to figure out what to do with the assets that are left behind.

From 2004 to 2013, more than 25 million participants in workplace plans left at least one retirement account behind when changing jobs, according to a January report from the Government Accountability Office (GAO). Meanwhile, the DOL estimates that $15 million in distribution checks goes unclaimed each year. Read more

Christine Hradsky No Comments

Understanding 401(k) Plan Fees and Expenses


401(k) plan fees and expenses generally fall into three categories.

Plan sponsors face many challenges. One of the biggest is determining their 401(k) plan’s total cost, including the cost of investment management, plan administration and participant services. Fees and costs associated with a retirement plan’s investments are inevitable. However, ERISA requires that any compensation paid to any service provider — including an investment provider, manager or adviser — be reasonable. Read more

Christine Hradsky No Comments

Rules for 401(k) Plans: Part Timers and Distributions

Excluding Part-Timers from 401(k) Eligibility401(k) Plans

Question: We would like to amend our 401(k) plan to exclude all part-time employees from plan eligibility. Our plan requires an employee to complete 1,000 hours of service in a 12-month period before becoming eligible to participate in the plan, but we want to exclude part-time employees regardless of their hours. Can we do this?

Answer: The short answer is no, if you intend to exclude part-time employees based on their job classification as part-time, not their actual hours. Here’s why. Read more