The 401(k) Owner’s Manual
Preparing Participants, Protecting Fiduciaries
by
Book Cover & Preview Text
Table of Contents
Preface
Introduction
Why Is It Important to Get It Right regarding Your 401(k) Plan?
Chapter 1
Components of every 401(k) Plan
401(k) and ERISA 403(b) Plan Components
Chapter 2
What should I expect from My retirement Plan advisor?
Superior Retirement Outcomes for Participants
Superior Process for Fiduciary Issues
Better Plan Designs
Better Overall Asset Allocation among Plan Participants
More Reasonable Fees and More Efficient Vendor Management
DOL Fiduciary Rule and the “Best Interests” Standard of Care
What Is the Cost for Plan Advisor Services?
Chapter 3
Who Is the Fiduciary, and what Does ERISA require?
Who Is Not a Fiduciary?
What Should You Be Doing as a Fiduciary?
Minimizing Fiduciary Investment Risks— Three Layers of Defense
Qualified Default Investment Alternative (QDIA)
Investment Policy Statement
Sharing Fiduciary Investment Responsibility
Does a Fiduciary Warranty Provide Shelter from Liability?
Sharing Fiduciary Administrative Responsibility
An Option to Enhance Your Corporate Liability Coverage
A Corporate Trustee Adds Fiduciary Protection
Chapter 4
Optimal Plan Design strategies
Employee Benefit Approach to Plan Design
Owner-Centric and Advanced Plan Design
Employee Demographic Considerations
Plan Cost and Administrative Considerations
The Dreaded Refund
Safe Harbor Contribution Formulas
Automatic Enrollment: Serve the Plan on a Silver Platter
Think Automated, Not Mandatory Enrollment
The Downside of Automatic Enrollment
Use Automatic Escalation for Gradual Improvement
Stretch the Match
An Ideal Plan
Class Exclusions
Maximizing Benefits for High-Income Participants
Chapter 5
“My Plan Is Free” and secrets of Plan Pricing
Plan Sponsor and Participant Fee Disclosures
Party-in-Interest: Value Add, Benign Influence, or Conflict of Interest?
The US Supreme Court Weighs In on Mutual Fund Expenses
The Total Transparency Arrangement: Zero Revenue Sharing
“Better Than Free”—Bookkeeping Accounts and ERISA Buckets
Fee Leveling between Participants
What Expenses Can Be Deducted from the Plan or Credit Account / ERISA Bucket?
Revenue Sharing—The Case for and Against
Pro Rata or Per Capita Pricing—Deciding How Participants Pay for Plan Services
Three Principles for Managing Plan Costs
What Is Our Target for Total Plan Cost?
Manage the Growth of Terminated Accounts
Making the Transition from Hidden to Transparent Pricing
Chapter 6
Vendor Management and Benchmarking
The Competitive Landscape
What to Include in a 401(k) Request for Proposal
Ongoing Vendor Management
Periodic Benchmarking Analysis
How to Handle a Plan Conversion
Triple Mapping and Re-enrollment
Chapter 7
How to Choose the Ideal Plan Investments
Why Top Funds Fail to Continue
A Role for Active Management
How to Design an Investment Menu
5 Investment Selection and Due Diligence
The Perils of Selecting an Investment Option for Cash
Choosing a Qualified Default Investment Alternative (QDIA)
Robo-Advised Managed Accounts
When Is It Time to Replace or Add an Investment Option?
Issues with Real Estate and Alternatives
Self-Directed Brokerage
Chapter 8
Managing for Outcomes and Participant retirement readiness
Ninety Percent of Eligible Employees Participate in the Plan
Ten Percent Savings Rate, Plus Employer Contributions
Ninety Percent of Participants Use Automated Investment Allocation
Keys to Effective Education and Communications
Paralysis by Analysis
Three Participant Investor Profiles: Passive, Engaged, Active
Agenda of the Employee Group Meeting
Instant Change: The QDIA Re-enrollment Strategy
How Important Is Fund Selection for Participants?
Chapter 9
Four success stories
Overcoming Apathy and Mistrust at an Industrial Company
Fiduciary Fear in the C-Suite
Set It, Forget It, and Neglect It
Tip of the Iceberg: Owners Learn What Lies Below
Conclusion
Key Best Practices
About the Authors
References and Bibliography
Formats
Book Details
Recognition Programs
About the Book
Employees have entrusted their retirement assets to your care. Are you making the right decisions? Whether you are a business owner or corporate manager responsible for establishing and maintaining a 401(k) program or an engaged participant interested in plan design, this manual provides practical recommendations on creating and maintaining a best-in-class plan. Three retirement plan professionals help you: Understand how 401(k) plans work and the features that drive successful employee retirement outcomes. Make prudent decisions concerning costs, vendor selection, investments, plan design and operations. Govern your plan to limit liability and protect fiduciaries, while enhancing investment opportunities and helping employees achieve financial security. Moreover, if your organization is a 501(c)(3) not-for-profit agency, foundation, or private school, this manual is applicable in almost all respects to ERISA 403(b) plans. While maintaining a best-in-class 401(k) plan may seem daunting, you can lower costs and provide personalized retirement planning and investment advice to employees – all with minimal fiduciary risk. Find out how with The 401(k) Owner’s Manual.
About the Author
Scott Everhart, President and founding firm member of Everhart Advisors, located in Dublin, Ohio, is a nationally recognized plan advisor and speaks with authority on the topics of fee transparency, revenue sharing, and cost control. Scott has been named as one of the nation’s “300 Most Influential Advisors in Defined Contribution” by 401kWire.com, and “20 Rising Stars of Retirement Plan Advisors” by Institutional Investor News. Scott earned his Certified Financial Planner designation in 1998 and is an Accredited I nvestment Fiduciary, illustrating knowledge and competency in fiduciary studies. Brian Hanna is a Senior Plan Consultant at Everhart Advisors and joined the firm in 1997. Brian has received formal training in fiduciary responsibility and due diligence, along with extensive experience in plan design, investment selection, and cost control. He has been a guest lecturer at workshops presented with the U.S. Department of Labor, Ohio Society of CPAs, Columbus Bar Association, and the Center for Due Diligence. He has contributed to numerous articles for local newspapers and other publications and was honored by Columbus Business First as a member of the “Forty Under 40” class in 2012. He earned the Accredited Investment Fiduciary (AIF) professional designation, awarded by the Center for Fiduciary Studies, in 2008. Robert Shwab, Research Director for The 401(k) Owner’s Manual, has 30 years of retirement plan industry expertise working with leading recordkeepers and investment companies. As a former Senior Manager at Ernst & Young, Rob managed complex process improvement, risk management and vendor selection engagements. He earned the Certified Employee Benefit Specialist (CEBS) Fellow designation from the Wharton School and International Foundation of Employee Benefit Plans, and the Accredited Retirement Plan Consultant (ARPC) designation from the Society of Professional Administrators and Recordkeepers. Rob serves as an industry representative on the FINRA Board of Arbitrators.