![]() ![]() Morningstar Investment Management LLC is solely responsible for assigning Participants to an investment portfolio from those created by the Advisor and for other Recommendations provided through the Advisory Services. The Advisor Firm ("the Advisor"), an independent registered investment adviser chosen by the Plan Sponsor or Plan Administrator, is solely responsible for the creation of the investment portfolios available to Participants through the Advisory Services. Advisory Services include retirement savings and investment recommendations ("Recommendations") offered as a point-in-time nondiscretionary service ("Advice") and/or an ongoing discretionary asset management service ("Managed Accounts"). At the direction of the Plan Sponsor or Plan Administrator, Participants may have access to Advisory Services offered by Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc., that are intended for citizens or legal residents of the United States or its territories. This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.1. ![]() ![]() For employers this can be a particularly smart move as auto-enrollment plans usually start participants off at a relatively low deferral level and an annual bump-up can help put employees on a stronger path to a more secure retirement. ![]() While auto-enrollment is increasing in popularity, far fewer companies take an important next step: automatically raising participants' deferral levels each year. Schwab has found that on average, employees who receive consultations more than double their savings rates because they feel more confident about investing and are happier with their plan. Employers should take the opportunity to remind employees about other strong features of its plan including free advice sessions and workshops, target date fund options that make diversifying and rebalancing easier, or a Roth 401k plan option. The reinstatement of the match is also a great time to rethink other key aspects of a 401k plan. Employers should reset to a higher match ceiling to encourage employees to save more. Schwab's research shows that employees will most often set their deferral rate at the plan's "match ceiling"- the amount of salary they must defer to receive the maximum employer matching contribution. This will allow firms to better identify any weak spots that need shoring up. While there is no question that matching contributions were a serious casualty of the recession, Schwab has found that anywhere from one-third to one-half of firms that stopped or reduced their contributions are thinking about reinstating them during 2010.Īs companies begin to evaluate their programs to reinstate the match, below are several key areas that employers should pay particular attention to:Įmployers should compare its plan match formula and overall structure to others in their industry, including similar sized companies and those in their geographical region to see if their retirement plan is still competitive and properly designed to attract the candidates it considers desirable.īy breaking down plan participants by their salary level, years of service, position and age, employers can observe participation and savings rates for each category. Some Considerations When Reinstating Your 401k MatchĬharles Schwab notes that as our economy begins to show signs of improvement, one of the most difficult decisions many companies will struggle with is whether or not the time is right to reinstate the 401k match. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |