Does Your Employee Retirement Plan Need an Upgrade?

Employees today are looking for more than a standard 401(k) plan. Savvy job candidates will compare your plan and matching contribution to your competitors and current employees might be lured away to a company with better benefits. How can you keep your employee retirement plan and your company competitive?

Reviewing your plan more often

Unlike health insurance, employers are less likely to review retirement plans regularly to determine if they are keeping up with any changes in the market or with the types of plans competitors are offering. Additionally, the vast majority of fees paid through a 401(k) plan are typically deducted from employee accounts and therefore do not cost employers a substantial amount of money.

While retirement plans may not be hitting the company’s bottom line hard, employees keep close track of their retirement balance and will expect employers to offer a healthy plan.

Sean McGarry, AIF® Vice President and Retirement Plan Services Manager at Rockland Trust, recommends that companies look at their retirement plans every three to five years to be sure that the plan is still the right fit. “You need to benchmark and keep track of your plan so you can see the signs that something needs to be adjusted. From participation levels to income replacement rates, these metrics can help guide your strategy if you pay attention to them,” he said.

Retirement savings options that may work for your employees

Employees often think of 401(k) plans as the standard retirement benefit offered by employers. There are, however, many retirement savings strategies with different advantages.

• Roth 401(k) features have become more popular, especially in light of the 2018 tax reform. Roth contributions allow for an after-tax contribution that grows tax free.
• A business owner, or an employee, could utilize an employer-sponsored Health Savings Account (HSA) to save money for eligible health expenses in retirement, freeing up other funds to be used on more fun activities like a vacation.
• Cash balance plans are on the rise for small employers. This type of retirement plan is a hybrid between defined contribution plans and defined benefit pension plans. It is funded by real dollars today, like a 401(k) plan, but with much higher contribution limits like a pension plan. This option is becoming more widely used, especially with business owners who paid an arm and a leg to put their kids through college and are now looking to catch up on their retirement savings.
  
  

Is it time for a change or upgrade?

Reviewing your plan consistently and working with a trusted adviser will prepare you for when it’s time to upgrade or make changes to your plan. You will want to consider more than just the cost of the plan itself. Comparing the services offered by your provider is important in understanding the overall value of your plan may offer to your employees. Rockland Trust can review your retirement plan and help guide you through your review of funds and expenses.  

It’s important to note that if you’re happy with your current plan provider, you don’t need to uproot that relationship to work with an independent adviser like Rockland Trust to help make your plan more efficient.

Is your retirement plan professional working in a fiduciary capacity?

Working with a retirement plan professional can help make sure you’re getting the best deal for your company and employees. Understanding if your plan professional works in a fiduciary capacity is an important part of the process.  

Brokers, for example, work under a suitability standard meaning as long as the product meets the needs of the end user, that product is deemed “suitable”. Investment advisers typically work under a fiduciary standard of care meaning the product must not only be suitable, but must also be in your best interest. The distinction seems small and nuanced, but it can have major consequences in terms of the advice you’re getting on what, for many people, will amount to your largest financial asset.  

If you’re unsure if the person helping you and your employees with your retirement plan works in a fiduciary capacity, consult your written services agreement. If you don’t have one, your adviser is probably operating under a suitability standard as a broker, which doesn’t require a contract.  

Don’t fall behind - talk to an adviser you trust to be sure that your plan best meets your company’s needs. 

Schedule a meeting with Sean Today!

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