401(k) Plans

Overview

Over the last twenty years, 401(k) plans have become very popular as evidenced by the substantial number of companies of all sizes and across industry sectors which have implemented such plans.

We find that one of the biggest reasons for the popularity of 401(k) plans, especially with small-medium sized employers, is the relatively low administrative costs for these plans. Further, with advances in computer technology, most 401(k) providers now offer "turnkey" programs, which include prototype plan documentation, investment management, daily valuation of accounts, secured telephone access (through use of PIN numbers) to account information by participants (365 days a year, 24 hours a day, using a WATS line), in many cases secure Internet access (to account information), and record keeping under one contract.

In arranging 401(k) plans for our clients, we deal with insurance companies and TPAs (third party administrators) for record keeping services, and retail mutual funds and institutional investment managers for investment management services. Depending on the situation we are presented with, we will review both packaged (record keeping and investment management services under one contract) and unbundled (record keeping priced and delivered separately from investment management services).

Insurance companies tend to offer packaged products which feature retail and institutional funds as well as internally managed funds. For small and medium-sized employers one advantage inherent in using an insurance company is the availability of investment options from more than one (investment management) source. It is often difficult to find one mutual fund family which is able to demonstrate expertise across a wide range of investment styles and asset classes.

The primary advantage with the unbundled approach is its inherent flexibility. If you like the record keeping but dislike the investments' performance, you can fire the investment manager but maintain the record keeper. And vice versa.

If you would like to receive a free, no-obligation 401(k) proposal which specifically addresses the needs, concerns, and issues you may have as a 401(k) plan sponsor, kindly either complete our Confidential Plan Sponsor Questionnaire, and fax the same to our office (847-669-4808). Or, feel free to email or call us at 888-669-4883, ext. 202.

See also:

• One-Person 401(k) plans

• MARKET TREND: Move toward consolidation of record keeping services

• Ten Important Questions That Every Plan Sponsor Should Be Asking

• Report: Too Many Fund Choices Can Drive Away Participants

• What 404c Requires

• Additional 401(k) Resources

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Contact Us
If you would like more information about 401(k) plans, please contact us at 888-669-4883, or email us at info@benico.com.