I read an article in US News and World Report that gives the 5 keys to telling whether or not you have a good 401(k) plan. Here is what they said are the 5 key characteristics: An active and engaged investment committee An investment process A menu of well-diversified investment options. Low expenses. Easily accessible investment advice. I don't disagree with them on these items, but with all due respect and deference, I think they missed a couple of key components. So let's say for the sake of argument, here are a few more. Good Documentation. No matter what your options are or what process you have, communication to participants is the key to a good benefit plan. Summary plan descriptions, summaries of material modification and annual reports are not just buzzwords pulled out of an ERISA dictionary. They are the links between the participants and the plan that describe how the plan works. Make sure your documentation is in order. Good Service Providers. Not just knowledgeable, but also responsive. Sponsoring a plan means you might have questions. You might need to make changes. You have need for advice. A good 401(k) plan has good service providers that are ready and willing to help the sponsor with whatever issues arise. Good Knowledge of the Participants. Ultimately the goal of the plan is to provide benefits to participants when they retire. But to do that, the sponsor has to know something about the population. There are lots of defined contribution benefit plans available and lost of "off the self" products. A plan sponsor should start by considering what type of plan might best suit his or her specific set of participants. Then design a plan around them. The most common complaint I hear about 401(k) plans is that employees don't participate enough. Well, maybe its not the employees, maybe its the plan. A good 401(k) plan fits the population. Everyone want to say they have a good retirement plan. And plan sponsors want to be sure they offer a good retirement plan. So make sure you define "good" correctly. Consider these characteristics before creating a plan, or look at your current plan and see if you should change. And make sure you have good support, like you will get from your attorneys at Fox Rothschild.
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