Small Business 401(k) Blog

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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401(k) Fees | Provider Shopping | Fiduciary Responsibility

How to “Value” 401(k) Administration Services and Investments

By: Eric Droblyen
May 13th, 2020

Employers have a fiduciary responsibility to pay only “reasonable" fees from the assets of their 401(k) plan so excess fees do not reduce participant investment returns needlessly. To confirm 401(k) fees are “reasonable," employers must benchmark them – basically, compare the administration and investment fees charged by their 401(k) provider to the fees charged by competing providers or industry averages. If you're responsible for keeping your company's 401(k) fees in check, I recommend you benchmark them on an “all-in” basis.

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401(k) Fees | Provider Shopping | Fiduciary Responsibility

A “Rosetta Stone” for Finding 401(k) Provider Fees

By: Eric Droblyen
April 29th, 2020

401(k) fees paid from plan assets reduce participant returns dollar-for-dollar. These lost earnings can dramatically erode a 401(k) account account balance over time, so employers have a fiduciary responsibility to pay only “reasonable” fees – so excess fees do not reduce participant returns needlessly. To evaluate the reasonableness of their 401(k) fees, employers must benchmark them – basically, compare the administration and investment fees charged by their 401(k) provider to the fees charged by competing 401(k) providers. I recommend employers do so on an “all-in” basis.

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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.

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Safe Harbor 401(k) | Thought Leadership | Fiduciary Responsibility

COVID-19 – 401(k) FAQs for Business Owners and Plan Participants

By: Eric Droblyen
March 31st, 2020

Without question, the COVID-19 pandemic has created a great deal of economic uncertainty. In response, we have received numerous crisis-related 401(k) questions from small business owners. In general, they want to know their options for cutting (or delaying) plan expenses and participant options for taking a 401(k) distribution and loan. This FAQ includes answers to many of the most common questions we have received.

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Investments | Thought Leadership | Fiduciary Responsibility

Index Funds Are Indisputably Prudent 401(k) Investments - How to Pick a Lineup

By: Eric Droblyen
March 4th, 2020

Inappropriate investment selection is one of the top three reasons why 401(k) fiduciaries are sued today. In my experience, employers can easily avoid these lawsuits by having a clear understanding of their investment-related 401(k) fiduciary responsibilities. These responsibilities are surprisingly basic. They boil down to selecting enough “prudent” investments to permit any plan participant to sufficiently diversify their account – to minimize their risk of unrecoverable losses. A prudent investment is simply one that meets its investment objective for reasonable fees. I’ve never seen a leading index fund from providers such as Vanguard, Fidelity, or Schwab fail to fit this bill. For that reason, I consider these funds to be indisputably prudent 401(k) investments.

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401(k) Fees | Provider Shopping | Fiduciary Responsibility

Don’t Let Your 401(k) Provider Hide the Cost of Your Plan

By: Eric Droblyen
February 5th, 2020

There are few industries where the phrase “you get what you pay for” is less applicable than the 401(k) industry. That’s because equally competent 401(k) providers can charge dramatically different fees for comparable administration services and investments. This variability is a big problem for business owners – who have a fiduciary responsibility to protect the interests of their 401(k) participants by paying only “reasonable” fees from plan assets. If an owner fails to meet their responsibility, they can be personally liable for restoring participant losses due to excessive fee payments.

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Multiple Employer Plans | Thought Leadership | Fiduciary Responsibility

The SECURE Act of 2019 – An Analysis of Key 401(k) Changes

By: Eric Droblyen
January 8th, 2020

On December 20, 2019, the President signed the Further Consolidated Appropriations Act, 2020 into law. This year-end spending package included the most extensive retirement plan legislation in over a decade - the Setting Every Community Up for Retirement Enhancement (SECURE) Act. After the SECURE Act was passed by the House, I judged the bill a mixed bag of good, bad, and ugly – the good representing welcome reform, the bad representing undue complexity, and the ugly representing handouts to the financial industry. That view has not changed now that the bill is law.

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