Retirement plans are awesome…until they’re not! And they’re *not* awesome when they’re a drain on your cash flow, a bane of the plan administrator’s existence, and considered a throw away benefit by your employees. Let’s talk about the back stories on some clean up work we were involved with lately and hopefully you can avoid these mistakes.

Here are tips for how to shop for a new retirement plan vendor. It’s really important to recognize that you need to choose well so your participants are happy and so you’re happy administering the plan. After all, this is a benefit. And, since you’re responsible for handling other people’s money, this isn’t a decision to be taken lightly.

Department of Labor regulations, ERISA, and specifically section 408(b)(2), require that plan sponsors obtain fee disclosures for their plan and that all such fees be “reasonable” for the services provided. Unfortunately, retirement plan fees have become increasingly complex in how they are collected and the marketplace is ever changing! Understanding value is tough.

Let’s start this one off by asking, when was the last time you looked at the retirement plan marketplace to see what was new? Besides margins decreasing, vendors have been working diligently to stay competitive and offer new features and programs. Don’t get me wrong, there’s a lot of stuff that is craptastic, but occasionally there are insights or attributes that would be really helpful to your plan.

Stuff goes awry during transitions sometimes. A consultant can help you understand what’s normal, what’s not, and what to expect, so that you have a frame of reference. Much like planning and executing a wedding, there’s a big difference in how mishaps are handled and the bride’s (or her mother’s) interpretations of how bad the mishaps are.

No one likes being audited, but it's really important to your plan. Here are our tips on who to hire to audit your ERISA retirement plan and why. Who needs an audit? Check the DOL's FAQs here.

Is your 401k or 403b plan going to need an audit this year? The rules are a little goofy to explain. Only plans that the IRS considers to be "large" plans need to submit an independent auditor's report along with their Form 5500 filing. "Large" means 100 or more participants BUT there's the 80/120 Rule that says if the year prior you filed on the Short Form 5500 and you have under 120 participants, then you DON'T have to have an audit. Here's the DOL's Audit FAQs: http://www.dol.gov/ebsa/faqs/faq_auditwaiver.html

1)        Have a sound reason for changing to a new provider. That reason could be: improved service, less administrative burden, better tools and resources for participants, more plan sponsor support services, more access to a broader range of investments, and so on. 

I meet with a lot of folks in the investment advisor and broker community. It never ceases to amaze me when they inquire how our practice is set up and how we manage to "make money" servicing retirement plans. Usually it's coming from a competitor who dabbles in our space citing the time they spend on it, or one who thinks they want to "get into the retirement plan business." I'll tell you how we do it and I'll tell you why you shouldn't hire a generalist to serve as your retirement plan's advisor.

1)  Not monitoring providers on a regular basis. No matter what, you’re still to blame for oversight. Hiring a prudent expert or a vendor takes work away and shares responsibilities, but you will always maintain the responsibility to make sure they’re qualified and doing their job.

1)  Starting a retirement plan without knowing all the options. 401k, SIMPLEs, and SEPs, oh my! Each type of plan has strengths, weaknesses, and impacts your budget differently. Make sure you know and understand all of your options when selecting the plan type and long-term impact! Beware of payroll sales people who say "Would you like a 401k with that?" This is not McDonalds where you're adding fries to your combo meal.

I am often asked what it is that a Retirement Plan Advisor does (we call them Retirement Planologists™ at our company). First, it's important to know that a retirement plan advisor works with a company to help them build and manage their company's retirement plan for their employees. (That's a very different thing than helping an individual plan for their retirement, which is what a financial planner/financial advisor does.) A Retirement Plan Advisor probably specializes in pensions, 401k, 403b, 457 and other plans provided by employers, and they may even have certain designations or credentials specific to employee retirement plans, such as the Accredited Investment Fiduciary or the Chartered Retirement Plan Specialist.

Searching for a new vendor to handle your retirement plan is a pain. Here’s some unsolicited advice.

This is a question we receive frequently when meeting with employees about their 401k plan. Hopefully this guide will help you know better where to go and what to do to retrieve your old 401k account or provide guidance to employees who are asking for your help in finding their old account.

A company match is a fantastic thing to offer your employees in a defined contribution (like 401k or 403b) plan. There are numerous studies that have shown that participation increases significantly when a match is offered, which will eventually turn into more people getting on the right track to be able to retire someday.

One of the perils of making “too much” money, or rather, hitting the IRS’s ceiling for the 401(a)(17)/404(l) compensation limit, is that you likely won’t be able to put enough money in your company’s retirement plan to fully fund your retirement.  (In other words, if you make more than $250,000, this generally applies to you.)  Discrimination testing in 401k plans often leads to the highly compensated employees being limited to how much they can contribute, so in addition to already being mathematically unable to save enough even if they max out (2013 max is $17,500 or $22,500 if you’re 50+), now they’re even more behind.  What to do?