8 Questions to Ask About 401k Plan Administration

These question will get to the root of 401(k) administration issues.
These question will get to the root of 401(k) administration issues.

Your clients look to you for counsel and advice—especially when it comes to fulfilling fiduciary obligations around ERISA-mandated administrative duties. These duties can include everything from distributing participant notices and managing eligibility requirements, to reviewing loans and hardship withdrawals and filing appropriate forms.

However, plan administration tasks can be overwhelming and time-consuming for some clients. Not only that, financial penalties for failing to accurately manage plan administration duties can be significant. One of the best ways to help a client who is struggling with plan administration is by understanding retirement provider service models and matching the right provider to the client’s needs.

Consider asking your clients and plan providers the following questions, which can help pinpoint client challenges around plan administration and determine the right provider to work with. 

Understanding a client’s plan administration problems

To find the right solution, you first need to identify the root of the problem. Here are a few questions to help you determine a client’s main concerns:

  1. Are you aware of all required administrative tasks and participant notices?
  2. Do you have an employee on point for completing your administrative duties, including printing and mailing notices?
  3. In the case of a Department of Labor or IRS investigation or audit, are you equipped to provide documentation that all tasks were completed accurately and on time?
  4. Can you quantify the hours spent managing each of these tasks, and how does that translate into a per-hour HR cost?
  5. How much money are you spending on postage, printing and materials to fulfill these responsibilities?

Evaluating retirement provider services

Administrative services offered by retirement providers can vary. For example, some may handle participant mailings, while others won’t. Offering up the wrong provider to solve a client problem could expose a plan sponsor to significant risk or additional burden. Here are a few questions to help you gain understanding of a retirement provider’s resources:

  1. Which ERISA-mandated administrative duties do you handle?
  2. How do you charge for managing these administrative duties?
  3. Do you accept full responsibility and make amends if the duties aren’t completed in an accurate and timely manner?

A successful solution

I recently heard from a plan advisor who’s had success with this approach. Using the questions we’ve outlined here, he learned that his client’s HR team was struggling to keep up with complex and time-consuming ERISA administrative requirements. The advisor recommended a solution that included fulfillment of required participant notices. The provider offering this solution also assumed full fiduciary responsibility for their accurate and timely delivery. With this change, the client’s HR staff has been freed up to focus on other priorities and is grateful to the advisor for uncovering a time- and cost-saving solution.

By asking these key questions of your clients and plan providers, you can identify challenges and deliver meaningful cost-saving solutions.

 

 

Ken Waineo
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Ken Waineo is the senior director of business development and sales operations at The Standard. Ken has more than 15 years of experience working with 401(k), 403(b), and defined benefit and 457(b) plans. In his role, Ken helps cultivate, strengthen and broaden channel relationships, in addition to looking for ways to improve the sales process. Ken graduated from Wheaton College with a bachelor’s degree in psychology and philosophy and earned his master’s degree from Portland State University.

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