401k Best Practices

In an effort to keep clients and business partners up to date on 401k best practices, Lawton Retirement Plan Consultants, LLC suggests the following resources.

10 Key Features Of A Retirement-Ready 401k. Is your 401k plan retirement ready? Take a look at this checklist of 401k best practices related to retirement readiness to make sure.

401k Best Practices: Decision-Making And Documentation Are you making 401k plan decisions using a prudent process? Do you always put the interests of plan participants ahead of the company’s when considering plan issues? This post contains a list of the 401k best practices related to decision-making and documentation.

401k Best Practices: Employee Education. Have you started planning your annual 401k employee education sessions? Generally, most plan sponsors conduct employee education sessions during the early part of the new year to explain changes that went into effect on January 1. As you think about your annual education sessions, keep the 401k best practices in this post in mind.

401k Best Practices: Fees. Are your plan fees market competitive? Do you meet your fiduciary obligations regarding 401k fees? Consider these 401k best practices relating to fees.

401k Best Practices: Investments. Interested in how your investment menu stacks up versus this marketplace? Take a look at this post, which outlines current 401k best practices for investment menus.

401k Best Practices: Plan Design. Are you questioning whether your plan design is still market competitive? A leading-edge 401k plan has the plan design features outlined in this post.

401k Investment Adviser Annual Reviews – What Employers Should Expect. At least once each year, 401k plan sponsors should be meeting with their 401k plan investment advisor to review what happened in the plan during the prior year. Those plan sponsors that are already meeting with their advisor on a quarterly basis take note – the annual review should be a little different. All annual reviews should cover the items outlined in the post.

401k Loans: The Worst Possible Investment. Find out why 401k loans are the worst possible investment anyone could possibly make.

401k RFP Tips For Employers. Recently my Registered Investment Advisory (RIA) firm has been fortunate to receive a number of Requests For Proposals (RFPs) for investment advisory services. While I am grateful to receive these RFPs, I continue to be puzzled by how some plan sponsors choose to manage their RFP process. So, outlined in this post, I have provided some tips on how plan sponsors can optimize their 401k RFP process to ensure it produces the best possible result.

Bad Idea: Rolling A 401k Account Into An IRABad Idea: Rolling A 401k Account Into An IRA, Part II and Bad Idea: Rolling A 401k Into An IRA, Part III. Is it a good idea for participants to roll their 401k account balance into a rollover IRA? In most cases, the answer is no.

Best 401k Plans Have These Six Features. Each year Brightscope, an independent financial information company that aggregates retirement plan data, releases a list of what it believes are the best large 401k plans. This post shares the six plan features that Brightscope says result in a 401k plan receiving a high ranking, along with my comments on each feature.

BlackRock Interview With Robert C. Lawton (PDF). Robert C. Lawton, President of Lawton Retirement Plan Consultants, is interviewed by former Wall Street Journal editor and BlackRock executive Kelly Greene on how to design the best 401k plan.

Educate Your Employees On Using HSAs In Retirement Planning. If you offer a High-Deductible Health Plan (HDHP) to your employees, they probably have the ability to contribute to Health Savings Accounts (HSAs). I believe that nearly everyone eligible to contribute to an HSA should max out their HSA contributions each year. Here’s why.

Employee Education Policy Statement Can Help Set Goals (PDF). Rather than just abandoning your employee education program, or resigning yourself to mediocre results, consider taking a harder look at your process by constructing an employee education policy statement.

Five Low-Cost Ways To Improve Your 401k Plan. After working with thousands of 401k plans for more than 30 years, I have consistently run into a relatively small number of easily fixable problems that can make a big difference in many 401k plans. Check out this list to see if your 401k plan can be improved.

Five Reasons To Benchmark Your 401k Plan This Year. Are you in the practice of benchmarking your retirement plan on a regular basis? Have you ever benchmarked your 401k plan? This post explains why you should benchmark your plan this year.

How To Avoid A DoL 401k Audit. According to PLANSPONSOR, there are an average of 3,600 Department of Labor (DoL) qualified retirement plan audits per year. Annual settlements related to violations typically total more than $1.5 billion annually. This post contains some suggests that may help you avoid a DoL audit of your 401k plan.

How To Evaluate Your 401k Investment Advisor. Each year you should spend some time evaluating the providers who work with your 401k plan. Assessing the performance of your 401k investment advisor is often the most difficult since he/she may be the captain of your 401k provider team. How can you tell if your 401k investment advisor is doing a good job? Check this post to find out!

How To Hire A 401k Investment Adviser. Employer plan sponsors often ask me which investment adviser credentials are most important to look for when hiring a 401k investment adviser. I have seen plan sponsors hire the wrong advisers because they aren’t looking at the right credentials and are using incorrect judging criteria. This post offers common-sense best practices to apply when hiring an adviser.

How To Know If You Are Getting Good Investment Advice. How do 401k plan sponsors know if they are receiving good investment advice? That question is more difficult to answer for plan sponsors than it is for individual investors since plan sponsors need to be more concerned about process than performance. It is not necessary for plan sponsors to offer the best performing funds in their 401k plans. Rather, they should be more concerned that the process used to select and monitor the investment options offered is compliant and sound. Check out this article to learn if you are receiving good investment advice.

Plugging 401k Plan Leakage. Significant amounts of participant balances are leaking out of 401k plans and not being replenished, with potentially disastrous results. Check out this post to learn 401k best practices related to plugging 401k plan leakage.

Self-Directed Brokerage Accounts In 401k Plans – Generally A Bad Idea. Does it make sense to offer a self-directed brokerage account option in your 401k plan? In most cases, the answer is no.

Seven Reasons To Re-Enroll Your 401k Participants. A number of plan sponsors re-enroll all their participants each year into managed account options. This post explores the reasons why they do that.

Seven Signs Of A Successful 401k.  Over the 30 years that I have spent consulting with plan sponsors about their 401k retirement plans, I have noticed that the best plans have the seven attributes outlined in this post. Take a look at these 401k best practices and compare them to your plan.

Should 401k Plan Sponsors Worry About The Roth Promise? Whenever I talk with 401k plan sponsors or participants about making Roth 401k contributions, at least half of them tell me they would never do it. They all cite the same reason. They don’t trust the federal government to keep its Roth 401k promise to allow tax-free distribution of Roth balances. I think they are wrong — not about trusting Uncle Sam, but about whether the government will keep its Roth 401k promise.

Should Your 401k Plan Offer ESG Investment Options? At the very least, your Investment Committee should have a discussion about the topic. This post explains why.

Socially Responsible Investing Ratings Can Boost Your 401k’s Value. Morningstar, creator of the Morningstar Star Ratings for mutual funds, has introduced Sustainability Ratings to gauge an investment’s adherence to Socially Responsible Investment (SRI) principles. A U.S. Trust survey found SRI factors are important to 93% of millennials when making an investment decision. Your 401k plan can have greater value to your employees if you begin sharing Morningstar’s Sustainability Ratings for your 401k investment options.

Stop Making 401k Contributions — Fill Up Your HSA First. This post explains why it is more important to max out HSA contributions before making 401k contributions.

The 10 Biggest 401k Plan Misperceptions. Distilled from a career spent counseling retirement plan sponsors and participants, this post shares the 10 biggest misperceptions I have heard about 401k retirement plans.

Using Behavioral Finance To Help With 401k Decision-Making (PDF). Recent behavioral finance studies have shed new light on how investors cope with the challenges of making financial decisions. Study results shared by Fidelity illustrate why many 401k plan participants make such poor decisions. Learn what is keeping your participants from making better decisions and what you can do to help.

What To Look For In A Top 401k Investment Adviser. Most employer plan sponsors use an investment adviser to help them with their 401k plans. This is a smart decision since most advisers are able to save plan sponsors at least as much as they charge. How can you tell if you are working with a good investment adviser? This post outlines 401k best practices related to investment advisers.

What Your 401k Investment Committee Should Discuss. Wondering if you are talking about the right stuff at your investment committee meetings? Check out this post to learn what you should be discussing.

Why All 401k Sponsors Should Use BrokerCheck. Are you working with an honest investment advisor on your 401k plan? One way to find out is by using BrokerCheck — a free service provided by the Financial Industry Regulatory Authority (FINRA). This post outlines how you can use BrokerCheck to research the background of your investment advisor. Don’t worry, financial advisors are not informed when you use the service to check their backgrounds.

Why You Should Make Only Roth 401k Contributions. Most retirement plan participants have the option of making regular pre-tax 401k contributions and/or Roth 401k after-tax contributions. Find out why making only Roth 401k contributions is best.

Why You Shouldn’t Use Custom TDFs In Your 401k. Custom TDFs can be expensive and constructed based upon dubious assumptions. You may want to think twice about using them in your plan.

Your 401k Investment Committee’s Most Important Fiduciary Responsibilities. Ever wonder whether you are discussing the correct things at your investment committee meetings? Find out what you should be talking about in this post.

Your 401k Plan’s IPS Should Include These Items. Does your 401k plan have an updated Investment Policy Statement (IPS)? Although you aren’t required by law to have one, the IPS is one of your plan’s most important documents. Take a look at this post to learn why having an updated IPS is so important.


Additional Resources

Reporting and Disclosure Guide for Employee Benefit Plans, from the DoL

Are you complying with all required disclosure and notification requirements? This guide from the Department of Labor (DoL) contains a list of your disclosure, reporting, and compliance responsibilities.

Unsure if the fees you’re paying your 401k providers are reasonable?


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12 Low-Cost Ways to Improve Your 401k Plan

After working with hundreds of 401k plans for more than 30 years I have compiled a list of low-cost quick fixes that can make a big difference in your 401k plan. Click the button below and complete the form to download the list.