Have you heard of an Education Policy Statement? If it sounds like "Investment Policy Statement," then you get the idea. The concept of an EPS is not new and, to some extent, some IPSs contain information pertaining to employee and trustee education. But, until recently, the idea of implementing a comprehensive EPS has not been broadly considered by 401(k) plan sponsors. As we see 401(k) plans evolve back toward the savings vehicle it was originally, many see a need to reconfigure the current investment-centric 401(k) education programs and replace them with savings-based education programs.
At the same time, creating an EPS that parallels an IPS is being seriously considered. However, as explained in the article, "Coming Soon From a 401(k) Plan Sponsor Near You: A New and Improved Focus on Participant Education," (FiduciaryNews.com, Oct. 29, 2013), an EPS may be too risky to adopt until we know the most effective way to address the various (and changing) constituencies of 401(k) plans.
Rather than using an EPS, it may be more prudent to start with an Annual Education Plan (AEP). As the name implies, an AEP is created once a year. Once the year ends, the 401(k) plan sponsor's obligation to the AEP disappears. Unlike an EPS, an AEP may be scrapped, revised or rewritten the next year. This way, as plan demographics change, it's much easier to incorporate them into a new AEP.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
