From fiduciary responsibilities, to the SECURE Act, to supporting employees, and beyond, here are 6 questions sponsors are either too busy to ask or don’t know they should be inquiring about.
This 401(k) retirement plan offers generous perks for small business owners and employees alike.
FOR WORKERS, A STANDARD 401(k) plan offers a straightforward and tax-advantaged way to save for retirement, but for employers, setting up a 401(k) plan is anything but simple. Companies who want to offer 401(k) savings plans to their employees must ensure they don’t run afoul of complicated government rules.
A key regulation for most 401(k) plans is the requirement for annual nondiscrimination tests that are designed to prove a plan doesn’t unfairly favor certain employees. “The purpose of a safe harbor plan is to exempt the (business) from those tests,” says Allison Brecher, general counsel and chief compliance officer for Vestwell, a digital retirement platform. By setting up a safe harbor 401(k), a business can provide its employees with the same tax benefits as a regular 401(k) plan but skip the onerous annual testing requirements.
A Vestwell report suggests the disconnect between SMB plan sponsors and advisors could lead to a missed opportunity to increase retirement plan participation.
The majority of plan sponsors (87 percent) in the small and medium-sized business (SMB) space said they spend less than 10 percent of their time managing their company’s retirement plan, and nearly 60 percent said plan success can be measured by the time it takes to manage the plan — the less time the better. A similar percentage said having no administration errors was a sign of a successful plan. Both markers fall under the category of saving time and work for the sponsor, according to a new report by digital recordkeeping platform Vestwell.
A new report based on the results of two separate surveys among plan advisors and plan sponsors looks at their perception of the industry as it relates to selling, adopting and maintaining plans.
Vestwell’s 2020 Retirement Trends Report analyzed these two profiles independently and comparatively to see where the groups align, where they differ and how they dictate current retirement trends. Conducted in August 2020, only advisors who sell retirement plans were allowed to respond to the advisor component of the survey, resulting in 434 responses. The sponsor survey included 164 plan sponsors that use Vestwell’s platform.
Vestwell, a digital retirement platform, surveyed 434 financial advisors and 164 plan sponsors in August to find out how they align, where they diverge and how they determine current trends in retirement.
Three out of four advisors in the survey said recordkeeping technology should be overhauled. Vestwell noted that their beliefs, versus those who believe that recordkeeping tech is fine as is, affected additional responses across the survey.
Three-quarters of retirement advisors believe recordkeeping technology is outdated and needs an overhaul, according to a survey released Monday by Vestwell. Over half said user experience was their biggest challenge using recordkeeper technology. Forty-eight percent cited lack of integrations and 45% said high fees were the biggest tech challenges they faced with their current providers.
Vestwell conducted the survey in August among 434 advisors who sell retirement plans and 164 plan sponsors on the company’s platform.
While saying goodbye to 2020 might be a welcomed event for many, year-end brings with it a number of responsibilities, especially for corporate retirement plan sponsors.
This year is particularly noteworthy, as the 2020 year-end cycle will require additional scrutiny and there are a number of changes coming in 2021 that will require added preparation. The best thing a plansponsor can always be is prepared, so in order for 401k advisors to help them usher in a Happy New Year, consider these three important factors…
Check out our annual survey report, 2020 Retirement Trends Report: How Perceptions of Recordkeeping Affect the Way Advisors and Plan Sponsors Run Corporate Retirement Plans.
Here’s a sneak peek at what you’ll see:
- Why the majority of advisors believe recordkeeping is broken
- How advisors and plan sponsors measure the success of a plan (hint: it’s not the same!)
- What advisors are doing to evolve their businesses in the coming years
The retirement industry has a moral obligation to help Americans get to a place financially where they can live a secure and dignified retirement, says Ben Thomason, executive vice president of Vestwell.
From COVID-19 to the devastating wildfires and the upcoming presidential election, 2020 has been the year of uncertainty. Yet there’s one thing we do know: Now is an ideal time to launch a company sponsored retirement plan.