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7 essential retirement plan questions


It’s no secret that current and prospective employees want their employer to offer a retirement plan.

Whether your company is looking for a new retirement plan provider or reviewing your current retirement benefits, the first thing you need to understand is one size does not fit all.

When the time comes to select your plan provider, here are seven essential retirement plan questions to ask:

1. Does the provider have expertise with the type of plan you’re looking for?

Currently 401(k) plans are the most popular, and as the employer, you’re the plan fiduciary, which means you’re responsible for the whole plan. Some providers offer services that relieve you of some of that responsibility, and it may be appealing to allow those with expertise to exercise more control.

While 401(k) plans are the most common instrument, they might not be the right fit for you. Will the provider you select level with you and offer you other options to consider?

2. Do they understand the challenges of designing a plan for a company your size?

The size of your organization creates a unique set of needs that your provider should consider when offering potential options. A company with 100 or more employees has significantly different requirements than a company with 20 or fewer workers.

For instance:

  • Consider convenience versus autonomy when looking at the option of automatically enrolling your employees.
  • What is an appropriate amount of time for an employee to wait until they’re fully vested, and how will that help attract and retain quality workers?
  • Look into Safe Harbor provisions to avoid nondiscrimination testing issues. A Safe Harbor 401(k) plan is a specific 401(k) in which the employer matches the employee contribution up to a point or makes profit sharing contributions, and those contributions are immediately vested.

You may save your company money every year by eschewing features you don’t need, such as complex profit-sharing formulas.

3. What does each retirement plan option cost, and how are those costs paid?

As the employer, you have an obligation to know in advance about each retirement plan’s fees, which contribute to the total cost.

In addition, you need to be aware of what fees might accrue in order to make an informed decision. Some plans include fees that are a fixed rate, while others are variable (typically a percentage to the total assets).

Different plans offer flexibility on how fees are paid and by whom (best practices would discourage asking employees to pay 100 percent of fees).

4. What investments are available?

Your employees, like most consumers, may react positively if presented with a broad range of options offering aggressive, moderate and conservative investment vehicles.

After all, this is money they earned and are using to plan for their futures, so it stands to reason they’d like a little latitude to select a fund that meets their needs.

However, offering too many options can lead to information overload. Some people prefer simple choices.

Other people may prefer having a default investment alternative where they can leave their money until they make a choice how to invest it.

It’s important to gauge the interest and needs of your employees.

5. What does the per-pay-date process look like?

This information is essential when it comes to understanding what is coming out of employees’ paychecks.

Ask your provider for a detailed breakdown of data processes, including:

6. What kind of service and security is featured in the provider’s service model?

Based on your employees, you can decide if they would prefer personalized service or be content making their decisions through a website or an app.

Some retirement plans revolve primarily around a do-it-yourself website model with limited options for one-on-one interaction for employees seeking more information.

Even if you do select a more tech-savvy plan, consider finding something that offers employees the ability to contact an assigned representative or a call center. Being able to reach a person is especially essential in the age of account fraud and identity theft.

You should find out in advance if employee data is shared with third parties, or if your workers will be solicited for other services by the provider or other parties.

7. What makes your provider’s participation experience stand out?

In order to make a strong, positive first impression on your employees, find a retirement plan provider with a web presence that is interactive and intuitive.

Features, such as online investment calculators, helpful Q&A videos and online helpdesk chat sessions, can give your employees confidence and encourage participation.

After employees sign up for their accounts, you want a retirement plan provider that combines the best of global accessibility and mobile friendly capabilities. A plan that is easily accessible through an app is a big plus.

If you can do more than just review your balance – like make trades or compare funds – with assurances that your information is secure, that can also increase the workplace opinion of the plan.

Another enhancement is payroll integration, which means contributions are deposited quickly to allow participants to kick-start their earning potential for retirement.

Final thoughts

It’s a balancing act to make sure that plan design decisions are right for the company, while not losing sight of your employees’ objectives. With these seven retirement plan questions, you should be on good footing to find a plan that best suits the needs of your business.

For more information, download our free e-book: The Insperity guide to employee benefits.