In previous episodes of the ‘401k Cowboys’ series, we discussed:
Today, in Episode 51 of The 3 Wins Podcast, Legacy’s Matt Joines and I break down the five most common mistakes companies make with 401k plans—and how to avoid them. We provide practical solutions and best practices for each potential pitfall, making this episode a must-watch for any business owner, plan sponsor, or administrator.
Let’s dive in! 👇
Today’s episode is brought to you by our new book, Collaboration Effect on Profit: Overcoming Founder’s Syndrome to Achieve Sustainable Success—now available on Audible.
Key Takeaways from Episode 51
Mistake #1: Not Reviewing Plan Fees Regularly
[0:27] DOL requires fee review every 3-5 years
[1:09] Documentation is crucial for audit protection
[1:29] Don't need the lowest fees, but must justify fair value
[1:48] Consider benchmarking against 3-5 vendors
[0:46] Review services as plan grows and participants increase
Mistake #2: Neglecting Employee Education and Communication
[3:03] Address different participant engagement levels
[4:35] Consider both active and passive investors
[4:58] Implement automatic features for less engaged participants
[2:28] Stay current with regulatory changes (e.g., SECURE 2.0)
[3:48] Tailor communication to specific group needs and expectations
Mistake #3: Inadequate Compliance
[5:51] Work with legal counsel for complex situations
Key compliance areas:
[5:51] Payroll submission timing
[6:00] Notice requirements for plan changes
[6:00] 30-day blackout notices
[6:32] Loan management
[8:00] Consider Multiple Employer Plans (MEPs) for simplified administration
Mistake #4: Too Many Options
[10:11] Document fund selection/removal process
[12:24] Avoid excessive fund options (studies show less is better)
[11:17] Ensure fund menu matches participant demographics
[11:00] Watch for committee bias in fund selection
[12:24] Watch for illusion of diversification risks
Mistake #5: Overlooking Audit Requirements and Fiduciary Duties
[17:46] Understanding the 80/120 participant threshold rule
[19:11] Recent SECURE 2.0 changes to participant counting
[17:19] Audit requirement based on participant count, not assets
[20:44] Focus on efficient compliance processes
Expert Tips
[1:09] Document all decisions and processes
[7:05] Work with qualified advisors and service providers
[11:17] Balance participant needs with administrative efficiency
[2:28] Stay current with regulatory changes
[4:58] Consider automated features for passive participants
About the Hosts
Russ Clemmer: Host of The 3 Wins Podcast and CEO of Legacy Advisory Partners
Matt Joines: Certified Financial Planner
Additional Resources
Check out our new book, Collaboration Effect on Profit: Overcoming Founder’s Syndrome to Achieve Sustainable Success, here: https://legacyadvisorypartners.com/collaboration-effect-book/
Download our FREE whitepaper, “The 3 Wins: How to Unleash the Collaboration Effect on Profit in Your Company,” here: https://legacyadvisorypartners.com/3-wins-framework
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Where to Find The 3 Wins Podcast
YouTube (Legacy Advisory Partners Channel)
The 3 Wins Podcast is brought to you by Legacy Advisory Partners.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer member FINRA/SIPC. Advisory services through Investment Advisor Representatives of Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Legacy Advisory Partners are not affiliated. Perpetuate Capital is not affiliated with Cambridge or Legacy Advisory Partners.
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