Navigating Your Fiduciary Responsibility: Tips for Maximizing Your 401(k) Plan

Navigating Your Fiduciary Responsibility: Tips for Maximizing Your 401(k) Plan

Navigating Your Fiduciary Responsibility: Tips for Maximizing Your 401(k) Plan during October, National Retirement Security Month

Stock market volatility, inflation, paying off high interest debts and immediate expenses may be distracting your team from keeping retirement savings as a top priority. Still, one of the most important benefits you can offer your employees, and potential recruits, is participation in a workplace retirement savings plan.

A recent Schwab survey showed that a 401(k) plan is second only to health insurance as the most important benefit an employer can offer. According to the study “A 401(k) plan and health insurance are considered must-have benefits for more workers this year.”

October is National Retirement Security Month (NRSM), sponsored by the National Association of Government Defined Contribution Administrators (NAGDCA), a group dedicated to helping plan sponsors provide the best retirement security and deferred compensation plans and encouraging them to “engage with their employees to help them save for a secure retirement.”

Both employers and employees can learn how to take best advantage of the savings potential of a 401(k).


For the Employer: Funds, Fees and Fiduciary Responsibility

As a plan sponsor, employers can apply the “three F’s – Funds, Fees and Fiduciary Responsibility” to stay on track and offer a diverse, cost-effective plan:

  1. Funds: Offer Diverse Investment Options

Ensure that your plan includes a range of investment options, the proper share classes and a variety of investment options that are suitable for your employees to avoid breach of fiduciary duty.

  1. Fees: Keep Fees Reasonable

Regularly benchmark your plan fees to ensure they align with industry standards. 401(k) plans can come with high fees that eat into employees’ retirement savings. As a plan sponsor, it’s your responsibility to ensure that the fees charged to the plan are reasonable.

  1. Fiduciary Responsibility: Monitor Your Plan

Regularly assess your plan’s performance and make necessary changes to keep it aligned with your employees’ needs. Failure to do so could result in legal and financial consequences.

Properly administering a 401(k) plan can be challenging, requiring diligent oversight of fiduciary responsibilities, plan monitoring, ERISA disclosure and reporting, documentation and compliance with federal and state regulations.


For the Employee: Tax-deferred Savings and Employer Contributions

Many employees find retirement planning challenging and confusing. Providing employee education helps them understand the value of deferring their savings and taking advantage of options such as an employee match.

A CNBC survey taken in the late summer found “nearly 6 out of 10 workers, 57%, are contributing to a 401(k) or company-based savings account.” Most of those who were saving just put away as much as they could afford. Some took advantage of a company match (24%) and a small percentage (8%) saved by automatic default set by their plan.

Encouraging participation in retirement savings plans creates an opportunity to help employees take control of their future. Providing employee education about the plan and its options typically results in greater plan participation.


Secure 2.0 Act: Government Changes to Retirement Savings 

This year, Congress signed into law an omnibus spending bill that included expanded retirement planning provisions. The Secure 2.0 provisions offer benefits to both plan sponsors and employees making it more attractive for employers to offer retirement plans and to improve retirement outcomes of their employees. The improvements included:

  • automatic plan enrollment
  • required minimum distribution age increased, penalties decreased
  • increase in catch-up contributions
  • plan eligibility for long-term part-time employees
  • student loan payments to count as matching retirement contributions
  • emergency savings withdrawals without penalty


Employee Educator + Employer Advisor = Newcleus

Your employees invest their hard-earned retirement savings and expect consistent results. As a 401(k) plan sponsor, your plan must be managed responsibly and in the best interest of your employees.

Newcleus’ qualified plan experts provide the fiduciary oversight and compliance required to offer diverse investment options, reasonable fees, plan monitoring and record maintenance. The Newcleus suite of services includes:

  • Complimentary 401(k) audit of plan fees, investment offerings, fiduciary documentation, educational programs
  • Fiduciary oversight, compliance and 401(k) plan management
  • Diverse investment options
  • Educational support for employees
  • Industry monitoring and feedback

We will also assist in the research of other provider options if you are unhappy with your current one.


Don’t miss the opportunity to secure your employees’ financial future during National Retirement Security Month. To learn how Newcleus can help you and your employees with expert retirement plan management and fiduciary oversight, contact our qualified plan experts today.

Anthony V. McCracken Jr., CFP®, Managing Director – Retirement Plans

Joe Gastaldi, AIF®,C(k)P®, CBFA®, Managing Director – Retirement Plans

Anna L. Sanchez, Account Executive – Retirement Plan Advisors