employee 401k education

Providing 401k employee education solutions for staff members can ensure that they understand the value of these plans and the ways in which saving for the future can benefit them.

Working with a 401k advisor or manager with proven experience and expertise can be a practical step in the right direction for most businesses. A qualified 401k management company can deliver the right information on fiduciary responsibilities and other aspects of the Employee Retirement Income Security Act (ERISA) and 401k options. Here are some of the most important benefits of providing comprehensive employee education on 401k plans.

1. 401k Employee Education Can Increase Engagement

Taking time to educate employees about 401k plans and options can potentially increase participation in these programs. A 2018 survey conducted by the Employee Benefit Research Institute and published in Investment News indicated that 53 percent of workers believe that the benefits offered by their employers will be the primary source of income after they retire. This highlights the growing belief that Social Security will not be around for many workers and the need for increased 401k employee education to bridge the financial gap for these staff members.

While increased participation may not be directly beneficial to companies in the competitive marketplace, the indirect benefits can be significant:

  • Increased satisfaction with employee benefits can reduce the degree of turnover experienced by many companies. This can cut down on onboarding and training costs and can ensure the greatest continuity for your business enterprises.
  • Employees who understand their 401k plans are more likely to engage with these plans and their management. Those who take a more hands-on approach to their investment portfolio may be more satisfied with the outcomes. This can limit the chance of litigation being filed against a particular company for its management of 401k plans.
  • All types of employee education have a good chance of improving morale and increasing the sense of camaraderie and teamwork among staff members. Scheduling training on 401k fiduciary duties and other aspects of the 401k plan can both inform and inspire staff members to enhance the productivity of the entire organization.

By investing a little time in targeted 401k education programs, companies can promote the highest degree of engagement and job satisfaction among employees. This can pay off in increased productivity and improved morale throughout the entire organization.

2. Employee Education Can Increase Corporate Compliance

The Employee Benefits Security Administration (EBSA) offers helpful guidance and support for companies and employees on dealing with 401k issues and ensuring full compliance with the letter of the law concerning fiduciary responsibilities. EBSA’s fiduciary education campaign is designed specifically to provide added information for staff members who serve as fiduciaries for their companies. This can potentially boost in-house knowledge of the rules of fiduciary responsibility and ERISA law requirements.

Companies that outsource these processes to external 401k management firms must still meet their fiduciary responsibilities to their employees. According to the U.S. Department of Labor, these responsibilities include all of the following:

  • Making sure that plan investments are properly diversified
  • Using normal and reasonable prudence in choosing the right 401k companies to manage these plans
  • Following the plan documents unless they conflict with ERISA law
  • Acting for the benefit of employees in choosing the 401k plan provider and managing the investment plan
  • Evaluating the fees charged by the service provider and making sure those fees are in line with the fees of other comparable 401k companies

Educating key staff members about these fiduciary responsibilities can provide added motivation for adhering to both the letter and the spirit of ERISA law and for performing the necessary due diligence to stay on the right side of federal regulations regarding the administration of 401k plans.

Living up to corporate fiduciary responsibilities entails a number of different and fairly specific activities on the part of staff members, including the following:

  • Reviewing the overall performance of the service provider chosen to administer the 401k plan on behalf of employees
  • Reading and evaluating the reports and notices sent by 401k companies
  • Dealing with complaints lodged by participants in the plan
  • Keeping a close eye on the policies and general practices of the service provider
  • Monitoring the fees charged to ensure that they are in line with both the market and the agreement made with the 401k company

The review process should ideally be ongoing. If this is not possible, working with a company that regularly monitors fees and returns may be a good step toward ensuring compliance with the requirements of ERISA law and in meeting the fiduciary responsibilities associated with 401k plans.

3. Education Can Reduce Risks for Companies

401k employee education programs can also provide added opportunities for companies to explain the due diligence they are performing on behalf of their employees. This can offer real insights into the corporate decision-making process for staff members. Understanding the methods used to decide on an investment firm for 401k plans can often allow employees to feel more in control over their financial situations.

Companies that offer advice and management services for 401k plans can often provide expert help in setting up employee education sessions regarding these important benefits. This can streamline the education process for companies that may not have the in-house expertise to manage these sessions and can ensure the most accurate and informative 401k education for staff members at all levels of the organization.

By keeping employees in the loop regarding their 401k management and the performance of their funds, companies can live up to their ERISA requirements. This can reduce the risk of legal action on the part of employees or by the Department of Labor. Staff members who are informed of all aspects of their 401k plan administration are more likely to discuss any issues with employers before taking legal action. In this way, education sessions can allow employers an opportunity to explain actions taken on behalf of employees, which can reduce the risk of litigation by their employees.

Essentials of 401k Education

The company chosen to administer the 401k plan may already have educational material available. These documents or brochures typically include information on the fiduciary duty of in-house administrators of the 401k plan and guidelines on how to deal with these legal responsibilities. Targeted sessions can be scheduled for a few groups within the company:

  • Individuals who have not yet chosen to participate in the 401k plan may be encouraged to attend a meeting explaining the advantages of saving through these plans and the benefits of employer-sponsored 401k options.
  • Current participants may be interested in learning more about how their funds are allocated and diversified. The company administering the 401k plan can often lead these educational sessions to provide in-depth and accurate information on the fees, funds and other aspects of the 401k offered by the employer.
  • Staff members who are directly or indirectly responsible for selecting the 401k plan provider or managing the financial aspects of the plan require added education and training. The company chosen as the 401k plan provider can usually schedule sessions with these key employees one-on-one or in small-group training meetings. Making sure that these staff members understand all elements of their responsibilities can provide added protection for companies in managing their fiduciary obligations to 401k plan participants.

Planning for annual educational sessions on 401k plans can help small businesses and large corporations alike to provide the right information for employees. By working with a reputable firm to manage these educational requirements, companies of all sizes can stay on the right side of ERISA requirements.

How Quintes Can Help

The 401k experts at Quintes can provide you with solutions tailor-made to suit the needs of your company and your employees. Our services are scalable and customized, allowing you to manage your 401k plan in the most cost-effective and practical way:

  • Quintes offers administrative services that can provide a truly turn-key solution for your business. We handle all aspects of your 401k plan, including educating your staff members and providing you with the documentation needed to allow you to compare our fees and our performance with other companies in our area. This can protect you against litigation based on the management of your 401k investments.
  • If your company requires a more targeted approach to 401k plan management, Quintes also provides advisory services. These customized services are designed to provide your key staff members with the in-depth intelligence and knowledge they need to achieve greater success in managing your 401k funds. We can help you make the right choices while providing you with guidance on the legal aspects of administering your 401k plan.

Failure to stay on the right side of ERISA law could cost your company money and damage your reputation. Quintes can work with you to make sure that all due diligence is performed regularly and to the standards required by the law. Call us today at 831-759-3402 or visit us online to schedule an initial consultation. Our team of experts is ready to help you make the most practical and effective choices for all your 401k management needs.