A Word About Employer Sponsored Retirement Plans
401(k) Plans and Pension Plans are integral parts of any company. If run properly, the employer receives some credit from employees in recognition of the benefit being provided. On the other hand, a plan that performs poorly can actually hurt the employer-employee relationship.
For smaller employers a properly structured retirement plan can provide significant tax and wealth accumulation advantages. Employers need to understand that a plan that is run inefficiently or negligently becomes a liability for them rather than an asset.
For all retirement plans, five questions should be tantamount in your mind:
1) How much does my plan cost?
2) What am I getting for my money?
3) How does my plans performance compare to alternatives?
4) Am I maximizing MY benefits in the 401K plan?
5) Is my plan compliant with all DOL and IRS rules and regulations?
Let a Qualified 401K and Pension Administrator show how to improve service and save thousands of dollars over your current plan.
“We can easily forgive a child who is afraid of the Dark. The real tragedy is when are afraid of the Light.” PLATO
When was the last time you saw your Pension Plan representative? How often do they visit your operation? When was the last time you received investment advice that was sound and specific to your needs. TTG Financial will change all of this with regular visits by Registered Investment Advisors who give investor specific advice.
Fees (especially asset-based fees) effect investment performance. Employers have a fiduciary responsibility to make certain the fees they and their employees are paying are competitive. And if your plan is a Retail Commissioned Based Product, then you should be looking at your fees very closely. This is particularly important if your plan is with a Bank or Insurance Company.
TTG Financial offers true Institutional (wholesale) pricing.
Example: Plan A, a $1,000,000 balance 401k plan, owns shares of ABC Funds. Their annual expenses are equal to 1.2% a year, plus ABC’s R Share fund fees. Plan B, also a $1,000,000 401k plan, also owns shares of ABC Funds. Their annual expenses are equal to .55% a year, plus ABC’s Institutional fund fees.
The Results: Each Year, Plan A could pay as much as $10,000 more in fees than Plan B. If each plan were invested exactly the same, with an average return of 6% per year, Plan B could have over $170,000 more in the fund at the end of 10 years. The only difference between the two plans is that Plan A uses a Retail Product versus a Institutional/Wholesale product for Plan B. That’s a significant difference !
Although investment management expenses are important, perhaps the most expensive mistake a plan can make is to utilize underperforming investment options, or to not have enough options so as to allow their employees to properly diversify. Simply having multiple funds available does not assure proper diversification. In many cases, employers carry multiple funds that all behave similarly. TTG Financial uses a proprietary asset allocation program to help employers select the funds that allow for proper diversification.
Structure and Communication
It is not enough to offer diversified investment options with competitive expenses. The employer is also responsible to provide “education” to its’ employees regarding the specifics of its’ plan as well as education as to the investment options it offers. Most litigation with regard to an employer’s retirement plan stems from misunderstandings due to miscommunication or a simple lack of communication.
TTG Financial and its principals have conducted hundreds of 401(k) and pension educational meetings and have the experience to properly communicate the employer’s plan to employees.