Retirement Designs - 7 Important Questions

7 Important Questions

If you are preparing to establish a new 401k, or are considering a conversion of your existing plan, this quick-reference checklist can guide you in the process. Knowing what to ask is the most important step before you choose representation. There are three general areas of focus in considering the best fit provider: Administration & Record Keeping, Investments, and Employee Education.

Administration &
Record Keeping

Investments

Employee Education

Administration & Record Keeping

Question #1: How much work is this on the part of the employer? Small business plans should be easy to manage, where most of the day-to-day operations are completed by the record keeping team. Covered services should include all employee enrollment, education meetings, testing, tax forms, online access, and customer support to participants, so that your personal administration time is kept to an absolute minimum. The American 401k program offers a complete retirement plan solution with ease of operation on the part of the employer. An estimated monthly time commitment on your part, based on average employer experiences, is 10 to 15 minutes per month. Question #2: What are the total record keeping costs? Many 401k programs charge separately for each standard (required) annual services including such items as the IRS 5500 tax form, year end ADP testing, matching or Profit Sharing illustrations, and enrollment kits. During your review of potential providers, consider asking for a copy of the Service Agreement. This document will detail all fees and expenses associated with the installation and annual record keeping of your plan. With the American 401k, all record keeping fees are included under one consolidated annual base fee, a per-participant charge, and a set custodian fee. There are no “hidden fees.”

Investments

Question #3: Does the plan offer an expansive array of investment options with flexibility to add your own selections? Your plan should be structured with investment flexibility. The Trustee’s opportunity to add or remove funds without considerable expense is an advantage to the Plan. Additionally, the right number of investment slots is as vital to employee plan appreciation as the actual performance of underlying funds. Too few funds will not cover the necessity for a broad range of risk, while too many choices could become distractive and reduce participation. The American 401k includes an open-architecture fund platform encompassing multiple mutual fund managers, a comprehensive spectrum of investment categories, and various manager investment styles. As a Plan Sponsor, you have versatility to choose the right platform with your preferred total number of options.

Other positive features include:

Securities brokerage account option - for more sophisticated investors.
Lifestyle retirement funds – for investors who wish to select one fund for a targeted retirement date or intended level of risk based on their current life situation.

As fund performances, investment classifications, and suitability will change over time, it is important to review an Investment Policy Statement (IPS) on at least an annual basis. Our organization offers a complimentary IPS. The American 401k permits fund changes at any time, without cost. Question #4: What are the total investment expenses, and are there any hidden fees? Many 401k providers charge asset–based fees that effectively diminish the net performance of participant’s accounts. As plan assets grow, these dollars will add up, ultimately reducing needed retirement values by significant amounts. For example, an asset fee of 1% on first year total deposits of $50,000 is only $500, yet the same plan that grows to $500,000 will charge $5,000 to participant accounts in that year alone! Even when an asset fee is assessed under a declining percentage formula, small expenses compounded over time add up to large differences in accumulated capital. Look for a plan that offers a flat fee, or no asset fee, and no “hidden fees.” All mutual funds, even within in a 401k, have expenses as detailed by prospectus. It is very important to read the prospectus, and understand all investment related expenses, prior to investing.

Employee Education

Question #5: Does the plan offer in-person financial professionals to support employees during initial enrollment and ongoing one-on-one investment education? In today’s environment of increased DOL attention to enable employee’s to make informed investment decisions, employee education is an essential plan feature. Employee interactive education is fundamental in helping the Plan Sponsor to fulfill their fiduciary responsibilities. Within the American 401k, we provide ongoing comprehensive and interactive investment education. Participants receive specific education in the areas of asset allocation, diversification, and portfolio design consistent with their unique intended levels of risk.

Note: Asset allocation does not guarantee a profit or protect against loss in declining markets. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio or that diversification among asset classes will reduce risk.

Question #6: How are employees enrolled in the plan? Offering financial professional support, and taking a multi-faceted approach to education are central to increasing employee participation in your 401k.

Successful employee education should be an ongoing process encompassing a variety of methods:

Group enrollment meetings
One-on-one guidance
Enrollment kits with printed materials
Website access to learn about the plan & funds
Online retirement savings tools

Each of these approaches are utilized within the American 401k enrollment and continued education system. In the process, we will help to custom-design an education technique consistent with your overall employee investing experience. Question #7: How do employees receive ongoing retirement savings education? After enrollment, employees need continued support with asset allocation and an understanding of retirement plan rules (that may change from year-to-year). Select a provider who offers financial professionals and an asset tool such as Morningstar Principia Pro. With this approach, participants can benefit by proper selections per their unique retirement goals and intended level of risk. The American 401k is one such provider. We continue supporting employees throughout their important retirement savings years. Our communication is fashioned in a way that is easy for all employees to understand and thereby make informed decisions surrounding their retirement income needs. Your 401k should be structured around the interests of both the employer and the participants. Remember that the plan is only as good as it is perceived and utilized by employees. With the right intention, you are well on your way to implementing a program that is easy to manage, cost-effective, and enticing to employees! Are you still wondering if you have asked all of the right questions? Contact us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or call Toll Free (888) 552 7284 x 3014 for support in your search for the best fitting 401k provider.

Important Information

All administrative and record keeping services are offered by PB&H Benefits, LLC. The custodian trust company is Mid Atlantic Trust Company (MATC), providing a state-of-the art trading and reporting system that integrates record keeping, trust accounting, and straight-through processing with access to over 16,000 mutual funds in underlying accounts. All investments are offered by Registered Representatives of MML Investors Services, LLC, Securities are distributed through MML Investors Services, LLC, Member, SIPC. Supervisory Office: 2 Bala Plaza Suite 901 Bala Cynwyd, PA 19004 Tel (610) 660 9922. Investment education is provided by Registered Representatives of MML Investors Services, LLC. Note that our role as financial professionals, with respect to the 401k plan, is not to provide investment advice. We offer employee education including fund information and portfolio design using models that match the employee's intended level of risk and investment goals. In no way do we endorse any recommendations, advice, or opinions contained in Information developed by third party providers and mentioned in this website. We merely provide access to such information as a convenience to help you consider your design and investment selections. Any investment decisions you make are based solely upon your evaluation of financial circumstances and investment objectives, in the best interests of your Plan. Mutual Funds are sold by prospectus. You should carefully consider a fund’s investment objectives, charges, expenses, and risks before investing. The fund's prospectus, which can be obtained online (or hard copy) by calling your Registered Representative, contains this information and other facts about the fund. Please read the prospectus carefully before you invest or send money. We do not offer tax planning or legal advice. Please consult your CPA or attorney for specific tax implications and legal matters pertaining to your Plan.

Registered Representative Information

John M. Novak is a Registered Representative of and offers securities and investment advisory services through MML Investors Services, LLC, Member, SIPC. Supervisory Office:
First Financial Group
2 Bala Plaza Suite 901
Bala Cynwyd, PA 19004
Tel (610) 766 3014 Administrative and record keeping services offered by PB&H Benefits, LLC, and custodian services offered by Mid Atlantic Trust Company are not sponsored or offered through First Financial Group or MML Investors Services, LLC. PB&H and MATC are not affiliates or subsidiaries of MML Investors Services, LLC.

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