Is there Danger Within Your 401(k)Plan?
Taking a Deep-dive within your Company Retirement Plan No employer institutes a 401(k) Plan in anticipation of having employees think of it as anything other than a great employee benefit plan.
No employer institutes a 401(k) Plan in anticipation of having employees think of it as anything other than a great employee benefit plan. In 99 out of 100 cases, that is exactly what occurs. An employer takes the time and money to institute the plan and then commits the human capital to ensure the plan remains functional. The employer adds the 401(k) plan to the lineup of company benefits and voila, the employees are immediately the benefactors of tax-deferred savings, company contributions and a lineup of quality investment options. It is not quick, it is not easy and it does consume resources – but the thought process of the employer is that this retirement benefit will be appreciated by the employee base.
Or will it?
Then, two seasoned veterans of the retirement industry and financial specialists (one an attorney and one a Certified Public Accountant) team up to write a book for both retirement plan participants and retirement plan sponsors. Your 401(k)Plan – The Danger Within was written for the benefit of both plan sponsors and plan participants. Realizing that the successful 401(k) Plan is a collaboration between two interested parties (employee and employer) Roger Levy and Peter Roland have tackled the 401(k) / 403(b) investment process that befuddles many of those interested parties. You can view the early sections of Your 401(k)Plan – The Danger Within to see that it is written in the interest of cooperation.
Section One outlines the prudent steps that an employer should take (consider) when managing an investment process for the Plan. The book outlines easy questions that an employee can ask of an employer if any of the items outlined in the book seem to be missing. Many books can provide targeted questions that an employee can ask; but unlike most books that just give the Questions, this one goes the extra mile by providing the plan fiduciaries with the reason “Why” this question is important.
Section Two addresses basic financial planning related to saving for retirement within the qualified plan structure.
(If you think the topics of these two sections are not for you, then you probably need to read this book more than most.) You can easily view the 12 Chapter topics in page vii of the Introduction. The book is written in plain English and is not replete with investment jargon or confusing concepts.
As the authors point out, the danger that may lurk within your own 401(k) Plan is that available investment options are imprudent and that you may be paying excessive expenses that eat away at your investment earnings. As a prudent fiduciary you want to be certain your 401k plan offers the investment options and features that are best suited to providing your employees access to a secure retirement income.
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