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The Frugal Fiduciary Small Business 401(k) Blog

Get the latest industry news, deadlines and tips you need to know to help tackle your fiduciary responsibility needs.

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Provider Shopping | Financial Advice

A Common Sense 401(k) Plan for Small Businesses

By: Eric Droblyen
August 23rd, 2017

The Thrift Savings Plan (TSP) is a 401(k)-like plan for Federal employees. By combining index funds and low cost administration services, the TSP offers participants professionally-managed market returns with very low drag from expenses. In an Aspen Institute article last month, I wrote 401(k) plans modeled after the TSP are the key to incentivizing retirement plan sponsorship by small businesses – which today sits at a low 52 percent.  This rate is a big problem because American workers are 15 times less likely to save for retirement when their employer fails to offer a savings plan. I think TSP-like 401(k) plans offer indisputable value to participants. They make it dead simple for participants in even the smallest 401(k) plans to achieve professionally-managed, market-correlated returns for a very low all-in fee. Their value makes it easy for 401(k) plan sponsors to demonstrate their plan pays reasonable fees – an important fiduciary responsibility. In short, I think TSP-like 401(k) plans are a common sense retirement plan - a safe harbor of sorts from the confusing array of services, fee structures and investments offered by 401(k) providers today. That said, these simple and effective plans are not for everybody. Sometimes, 401(k) investments and investment-related services with higher fees are a better fit for a small business and its employees. Not sure if you’re one of these businesses?  Compare these services against a TSP baseline to decide if they are worth the extra money.

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Provider Shopping | Financial Advice

401(k) Loan Rules – What Plan Participants Need to Know

By: Eric Droblyen
August 9th, 2017

Many employers allow employees to take loans from their 401(k) account.  A loan feature is generally appreciated by 401(k) plan participants, but the complicated rules that govern these loans are often misunderstood.  This is a problem because taxes or penalties can result when 401(k) participants violate these rules.

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401(k) Plan Design Checklist

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Subscribe to the The Frugal Financial Small Business 401(k) Blog and receive this free checklist for help in determing the best 401(k) plan design options and fit for your company.

Blog Feature

Retirement Plan Types | Plan Design

403(b) vs. 401(k) Plans for Non-Financial People

By: Holly Roussel-Godfrey
July 26th, 2017

You’ve been taxed with the responsibility of setting up a retirement plan for your tax exempt organization and now you’re trying to decide between a 403(b) or a 401(k) plan. You’ve Googled, you’ve read, you’ve cringed at the technical language presented to you, desperately trying to understand the differences. Been there, done that.

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Retirement Planning | 401(k) Studies | Thought Leadership

Expanding Small Biz Retirement Plan Coverage – 401(k) Reforms Are Needed

By: Eric Droblyen
July 12th, 2017

According to AARP, Americans are 15 times more likely to save for retirement when they can do so by payroll deduction through a 401(k) or other employer-sponsored retirement plan. However, while most large businesses – companies with more than 100 employees – sponsor a retirement plan, 51 to 71 percent of small businesses don’t. Because workplace retirement plans make savings – and in turn, a comfortable retirement – dramatically more likely for workers, increasing this percentage is essential.

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401(k) Fees

Are Your 401(k) Fees “Reasonable?”  Benchmark Them to Find Out

By: Eric Droblyen
June 28th, 2017

If you're a 401(k) plan sponsor, you have a fiduciary responsibility to only pay reasonable plan fees and expenses from plan assets. Keeping 401(k) plan fees in check is one of your most important fiduciary responsibilities because even small excessive fee amounts each year can substantially reduce a participant nest egg over decades of saving. Excessive 401(k) fees can also mean severe consequences for you - including personal liability.

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DOL Fiduciary Rule

The DOL Fiduciary Rule – What Employers Need to Know

By: Eric Droblyen
June 14th, 2017

On June 9, the Department of Labor's (DOL) Fiduciary Rule took effect and upgraded every stock broker and insurance agent with a 401(k) client to a plan fiduciary under ERISA. However, there is a catch – while these financial advisors were made ERISA fiduciaries on June 9, the DOL won’t “pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions” until January 1, 2018. This transition period gives newly-minted fiduciaries time to fully comply with the rule – which many advisors did not expect to be implemented.

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