We're in the final stretch of the year, and that means it's that time when business executives reflect back on the past twelve months. Those responsible for the company's 401(k) plan may find themselves feeling anxious. (Photo: Shutterstock)
They say a bull market climbs a wall of worry. That might lead one to the conclusion that, contrary to popular belief, worrying is actually a good thing. In fact, if you're a plan sponsor, worrying is not only a good thing, it's a proactive method for keeping yourself out of trouble.
We're in the final stretch of the year, and that means it's that time when business executives reflect back on the past twelve months. Those responsible for the company's 401(k) plan may find themselves feeling anxious (see “7 Concerns on the Forefront of 401k Plan Sponsors' Minds Right Now,” FiduciaryNews.com, November 27, 2018). And that's not a bad thing. Here's why.
Most plan sponsors don't think “401(k),” “ERISA,” or “Retirement” on a 24/7 basis. Rather, their 24/7 world consists of production efficiencies, sales quotas, and profit margins.
When they finally do turn their filled-to-capacity attention to the 401(k) plan, they have more questions than answers: Do we have the right policies? Should we allow hardship withdrawals? Has the plan document been updated to comply with the latest regulations? Are we doing enough to help our employees retire comfortably? And, most important, how much liability am I really exposing myself to?
The lack of answers to questions like these breeds uncertainty. And uncertainty breeds anxiety.
That's normal and that's good. It's good for the plan sponsor, and it's good for the plan participant. It virtually guarantees alignment of the best interests of both parties.
A plan sponsor who worries about the plan is more likely to try to alleviate those worries. This means double-checking various areas of concern. Companies accomplish this either through dedicated personnel (if they're large enough) or through third-party providers.
In either case, plan sponsors worry enough to understand the value of relying on someone who is looking at all the factors involving the plan on a 24/7 basis. Such reliance reduces the likelihood of a significant error.
In an ironic twist, the actions resulting from excess anxiety can result in reduced anxiety. In other words – and this is where the irony comes in – you can't dampen down your worry unless you are worried in the first place.
Maybe it's easier to understand this by imagining the opposite took place. Suppose, instead of being overly concerned about their 401(k), plan sponsors were apathetic. They simply don't care about it. Because they don't care, they don't hire competent service providers. Because they don't care, they don't adopt policies that increase the odds their employees will retire in comfort. Because they don't care, they don't keep their plan in compliance with the current DOL and IRS rules.
What do you get from an apathetic plan sponsor? A mess. The kind of mess Mr. Schlichter and his tort-attorney buddies constantly search for.
That's not a good thing for plan sponsors, primarily because it's not a good thing for plan participants.
Can you see why we should encourage plan sponsors to worry more? It's the best way to spur them to embrace the actions that will most protect them as well as their employees.
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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).
