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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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Multiple Employer Plans | Provider Shopping | Fiduciary Responsibility

How MEPs Signal a Broken 401(k) Industry

By: Eric Droblyen
October 30th, 2019

According to AARP, Americans are 15 times more likely to save for retirement when they are covered by a workplace 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. Causing many small business owners to steer clear of 401(k) plans, in my view, is a perception that plan sponsorship is too expensive, time-consuming, and/or fraught with liability – in short, not worth the trouble. To help overcome this perception – and close the small business coverage gap – I think we need more straightforward and transparent 401(k) plans.

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401(k) Fees | Provider Shopping | Fiduciary Responsibility

3 Warning Signs Your 401(k) Provider is Ripping You Off

By: Eric Droblyen
October 16th, 2019

Would you buy a product if you didn’t know its cost? I doubt it. What if overpaying for that product could lead to serious consequences like being sued or postponing retirement? I know you’re not buying then. And yet, I see business owners do something similar all the time. They’ll hire a 401(k) provider without fully understanding their fees. Even when they know that paying excessive 401(k) fees could get them sued or force plan participants - including themselves - to work longer than necessary to afford retirement.

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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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Plan Design | Plan Setup | Fiduciary Responsibility

401(k) Amendment Rules – Strict, but (Mostly) Straightforward

By: Eric Droblyen
September 18th, 2019

The day-to-day operation of all 401(k) plans must be governed by a written plan document that meets Internal Revenue Code requirements. Occasionally, 401(k) plan documents will require an amendment to reflect law changes or employer intentions. The Internal Revenue Service (IRS) has strict rules for plan amendments. It’s important for employers to understand them. Otherwise, they could miss the chance to make discretionary plan changes, accidentally cut back protected benefits, or face punishment for document non-compliance.

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Provider Shopping | 401(k) Studies | Financial Advice | Fiduciary Responsibility

401(k) Fee Study: What Does a Fiduciary-Grade Advisor Cost?

By: Eric Droblyen
August 7th, 2019

When an employer is looking to hire a financial advisor for their 401(k) plan, my advice to them is always the same – only consider financial advisors subject to a fiduciary standard of care. My reason is simple - only fiduciary-grade advisors are obligated by law to give impartial advice. In contrast, non-fiduciary advisors can give conflicted advice that favors investments with high commissions – making it harder for employers to keep their 401(k) fees in check. Generally, investment advisers are subject to a fiduciary standard of care, while brokers and insurance agents are not.

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Investments | 401(k) Fees | Provider Shopping | Fiduciary Responsibility

Revenue Sharing - 5 Reasons for 401(k) Fiduciaries to Avoid it

By: Eric Droblyen
July 24th, 2019

All 401(k) plans require three basic administration services – asset custody, participant recordkeeping and Third-Party Administration (TPA). A 401(k) provider can be paid “direct” or “indirect” fees from plan assets to deliver these services. Direct fees are deducted from participant accounts, while indirect fees are paid by plan investments. The most common form of indirect fee is revenue sharing. Below are five reasons why employers should pay direct fees for 401(k) administration services instead.

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Investments | Thought Leadership | Fiduciary Responsibility

The SPIVA Scorecard – A Must-Read for 401(k) Fiduciaries

By: Eric Droblyen
July 10th, 2019

There is no better scorekeeper in the active vs. passive fund debate than the SPIVA Scorecard. Published by S&P Dow Jones Indices, the semi-annual report measures the percentage of actively-managed funds that outperform their market index benchmark over specific periods of time, net of fees. I consider the SPIVA Scorecard a must-read for 401(k) fiduciaries.

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