HR and finance professionals become stewards of their organization’s 401k or 403b plan in many ways. Understanding the basics of 401k plan administration is not something that is taught in many employee handbooks. Some are thrust into it without much preparation or training while others, like the HR person attending a TPSU program held at FAU in Boca Raton, Florida, is a department of one meaning there’s no one else to help with benefits including the company’s defined contribution (DC) plan.
Coming from a company of 10,000 employees where there was a fully staffed 401k department, the HR manager at the 80-person company realized that she needed to learn more about how to run a 401k plan. She hoped to learn about the basics at TPSU including compliance and plan design but realized there’s a lot more to maximize the 401k plan for the company and its employees.
Though learning on the fly, which can be overwhelming, the HR professional started at the beginning using basic common sense: why does the company have a 401k plan; what are the goals; and how can she help the organization and the employees achieve them?
At the end of each TPSU program, students are given a “plan improvement checklist” to help them prioritize what they should be doing after the program. The HR department of one hopes to focus on:
- Auto enrollment and escalation
- Benchmarking providers
- Monitoring investments
Two lessons. It’s easy to get caught up in the details of running a 401k or 403b plan just hoping to avoid fines and get everything running smoothly. But it’s also important to step back and understand why the organization has a DC plan whether it’s recruiting, retention, less financial stress leading to better productivity, or helping people to retire. Because if you don’t know where you are going, any road will get you there – advice from the Cheshire Cat to Alice.
Secondly, organizations would never put professionals in charge of the pension or DB plan without proper training but that’s common for their DC plan relying on third parties to help. It’s incumbent, then, for these professionals to get training on their own for their benefit as well as for the benefit of the organization and the employees.
