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

401(k) Mutual Funds – Pay Attention to Share Class!

By: Eric Droblyen
May 1st, 2019

Mutual fund companies usually make their funds available to 401(k) plans in multiple share classes. While all classes hold the same underlying securities, they can charge very different fees. In general, employers have a fiduciary responsibility to choose the lowest-priced share class available to their 401(k) plan – so participant investment returns aren’t reduced unnecessarily by avoidable fees.

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Investments | Plan Setup | Fiduciary Responsibility | Financial Planning

401k Investment Advice – Pros and Cons of the 3 Basic Forms

By: Eric Droblyen
April 3rd, 2019

To meet retirement goals as affordably as possible, 401(k) participants must do two basic things – save early and often and invest appropriately. To invest appropriately, participants must construct - and maintain – an investment portfolio that includes a diversified mix of investments based on their time horizon (time to retirement) and risk tolerance. An appropriate portfolio balances the participant’s growth potential with risk of losses. Striking this balance is important. Otherwise, a participant could miss out on returns by investing too conservatively when young or sustain unrecoverable losses by investing too aggressively when older.

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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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Employee Enrollment | Investments | Retirement Planning

How Compound Interest and Dollar Cost Averaging Reduce the Cost of Retirement

By: Eric Droblyen
January 23rd, 2019

Most of us know it is smart to save money for those big-ticket items we really want to buy - a new television or car or home. Yet you may not realize that probably the most expensive thing you will ever buy in your lifetime is retirement.

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index funds | Investments | Financial Advice

3-Step Guide for Employers to Select and Monitor 401(k) Index Funds

By: Eric Droblyen
November 1st, 2017

Index funds not only offer 401(k) participants superior returns to comparable actively-managed funds net of fees, they are a clear and simple way for 401(k) sponsors to meet their investment-related fiduciary responsibilities.  Sponsors need only select three or more prudent investments that allow plan participants to sufficiently diversify their accounts.  Index funds are indisputably “prudent” by meeting their investment objective for market-correlated returns at reasonable fees.

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Investments | Financial Advice

401(k) Index Funds – They Make it Easy to Reduce Fiduciary Liability

By: Eric Droblyen
February 22nd, 2017

Investment in equity index funds – and other passively-managed investments designed to track a market index – is exploding. According to a Morningstar study, these investments took in a record $504.8 billion in 2016. That’s in contrast to actively-managed funds, which are designed to outperform an index. These funds experienced outflows of $340.1 billion in 2016.

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Investments | Provider Shopping | Financial Advice

Picking 401k Investments and Related Services Is Easy When Fiduciaries Know Their Options

By: Eric Droblyen
April 6th, 2016

When a small business sponsors a 401k plan, several investment-related decisions must be made by fiduciaries. Dramatically different fees and expenses can result from this decision-making, so fiduciaries should know their options in order to make “prudent” decisions on behalf of plan participants – an obligation under ERISA. Otherwise, personal liability can result.

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