401k Plan Sponsor Pays Plan Expense and Portion of Fund Fees. At a TPSU program held at USF in Tampa, a 401k plan sponsor explains why his company not only pays all plan expenses but also picks up a portion of the cost of the investments.
The relatively new, 107 employee, Tampa based company wanted to encourage participation by keeping participant costs to a minimum. But they had to market it to employees to let them know what a great deal they were getting. And when the workers compared their plan to colleagues, they realized the benefit.
While paying a portion of the expense fees is relatively unheard of, more and more plan sponsors are picking up the cost of running their retirement plan. Not only does it limit fiduciary liability because plan assets are not being used, employees are more likely to participate and will be in a better position to retire.
While it is understandable why companies have backed away from traditional pension plans because of the cost and unfunded liabilities, some organizations are starting to realize that investing in their employees’ retirement plan, at least to some degree, might be a good investment. Not only will employees be likely to stay longer, new workers will be attracted to the company. Financial stress will be minimized and older workers will be better prepared to retire, saving the company healthcare and salary costs as well as making way for younger workers.
Watch this fascinating video – hopefully, it is a trend that more plan sponsors will follow.