Some random thoughts on the retirement plan business
- Cost is an overused consideration for picking plan providers, value and quality are underused.
- Target benefit plans are the Boo Berry Cereal of retirement plans. You know they exist, but you rarely see them.
- Target date funds, what’s the target? In 2008-2010, the target was the participant’s retirement savings that used them. The target was eliminated with extreme prejudice, as they would say in Apocalypse Now. I will never be comfortable with them.
- People can’t understand that profit-sharing plans don’t require profits, but what does a Money Purchase Plan’s name mean? How do you purchase money?
- The weirdest 401(k) plan investment I ever came across was an antique toilet.
- The quality of a third-party administrator (TPA) can be determined on just one thing, the quality in support and education they give to their administrators. Good TPAs educate their workers, bad TPAs don’t.
- The funniest beneficiary form I ever saw is when a participant selected someone as a beneficiary. For the relationship to the beneficiary, the Participant put “Good Time Joe.”
- The worst legal determination is when I had to figure out what to do when a beneficiary killed a plan participant.
- Plan sponsors will show more concern about plan costs when they realize that if the owners are participants in the plan, they are also paying way too much in fees themselves.
- The most difficult client I ever had was a company whose H.R. director had me re-write the plan document 7 different times and at one point wanted me to draft it with elapsed time that required 1,000 hours (which is impossible because they are conflicting concepts).
- Love how people talk about ERISA §3(38) fiduciaries being a new concept, I think they were originally part of ERISA when it was signed into law in 1974. Same with multiple employer plans, they have been around since then roo.
- A fiduciary warranty offered by a plan custodian is the retirement plan industry’s version of the $3 bill.
- Never hire an auditor for your 401(k) plan if they don’t know what revenue sharing is.
- Will never forget the gall of a mutual fund company acting as TPA who thought nothing wrong of running a 401(k) plan as a safe harbor plan even though it didn’t have the provision because they never charged for compliance testing.
- Plan design is an art, a fancy participant website is not.
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