Advisers should watch out for unwitting partial plan terminations tied to layoffs and lasting damage to employees’ retirement readiness caused by hardship withdrawals.
Tag: Plan design
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Having an odd number of members is sensible, as is pursuing a committee that reflects the employee population’s demographics.
“They are hiring advisers to understand how well their plan is functioning and how to improve it,” Jordan Burgess, with Fidelity Institutional Asset Management, tells PLANADVISER.
They impact participation, contributions and asset allocation, according to a research paper supported by a grant from the Social Security Administration.
Companies that help retirement plan sponsors with investments also provide benefits to their own employees; in some ways, assets managers’ plans resemble the broader marketplace, while in others they stand out.
Advisers can play a role by encouraging actions by plan sponsors and participants.
Nearly 86% of not-for-profit health care entities reported that financial advice in some form is offered to their defined contribution plan participants, compared to 79.4% of for-profit entities.
A panel of expert witnesses from across the financial services domain discussed shortcomings and opportunities for improvement in the U.S. retirement savings system; they urged House members to embrace bipartisanship and commonsense solutions.
Janus Henderson research suggests the vast majority of auto-enrollment programs fund only pre-tax accounts; this is despite the fact that for younger, lower-income employees, funding a Roth account may be a more appropriate long-term option.
In addition, a person invested in a stable value fund versus someone invested in a target-date fund could end up with a balance as much as 59% lower, BlackRock says.
In the past 10 years, the average 401(k) balance has grown 87%, from $56,900 in the third quarter of 2008, Fidelity Investments reports.