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Reviewing Your Participants 401(k)

Published by Kim Moore on Aug 27, 2020 6:00:00 AM

If you are a 401k Plan Sponsor you may have wondered what guidance you can give your participants to aid in their review of their 401k account. The following information is a suggestion for you to use to aid in those discussions.

  • Review of investment performance. Your service provider should report investment information periodically to all participants. This information should include performance statistics and compare each investment to a comparison benchmark. Any investments that are underperforming compared to the benchmark should be reviewed. The participant may consider making a presenting_to_audience_22423-1change to another fund choice. If you can offer an Investment Advisor to consult with the participant that will help aid in their review and decision-making.

  • Review Statement. Participants should periodically review their statements to ensure the correct deferral amount is being withheld and that the correct company match is also applied to their account. They should ensure any rate changes that were requested have been applied in a timely manner. Also, they should verify all payrolls have contributions applied. If they see anything unusual or believe an error has occurred, provide a contact in payroll or Human Resources that can research the items and answer the participant’s questions.

  • Review loan repayments. If participants have taken a loan from their Plan account, they should review their participant statements frequently to ensure the loan repayments are being applied properly and timely. Any issues should be directed to their payroll contact.

  • Review planning information. We also would recommend participants review the retirement planning information available to them on the service provider participant website. Often these materials are very useful as participants plan their savings and investment selections with a view toward their retirement. These sites are often written to be easy to understand and help provide information on tax planning and medical insurance planning as you approach retirement age.

Although it remains the responsibility of the participant to ensure their 401(k) account provides the funds they will need at the end of their working life, we believe providing as much information as possible to employees will help ensure they receive the most benefit possible out of the options you provide to them as their employer. The 401(k) account is an important part of a company suite of benefits and providing information to help understand what can be a complicated area for most employees will lead to better participant and help with employee satisfaction.

Retirement plans can be very complex. As an innovative firm Summit CPA specializes in 401(k) audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. For assistance contact our office at (866) 497-9761 to schedule an appointment.

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