The employee benefits plan you offered five years ago may not suit your organization today. And with industrywide changes impacting 401(k) plans, businesses need a partner who can guide them through the process of designing and implementing flexible retirement plans.
“There have been big, sweeping changes in the industry over the last few years, and we can expect those to continue,” says Jeff West, first vice president of wealth management for Old Second National Bank, Aurora, Ill.
Since 401(k) plans were introduced in the early 1980s, the savings vehicle has revolutionized the retirement plan business and outpaced pension plans in assets, West says. The sheer amount of 401(k) assets — worth trillions of dollars — has prompted the need for greater oversight of these plans. At the same time, employers need employee benefits that can flex with their ever-changing companies, which offers a great opportunity.
“The key is to understand regulatory changes and ensure that your plan is compliant so employers and their work forces realize the full benefit of their plans,” West says.
Smart Business spoke with West about employee benefits plans and how industry changes are affecting the way plans are designed, administered and regulated.
What changes have occurred recently in the industry that affect profit-sharing plans?
There have been many updates recently, especially as more players are entering the profit-sharing field since the 401(k) has become such a popular plan. For example, providers must supply the plan sponsor with a Service Provider Document Disclosure. This is a tool for the fiduciaries of retirement plans to make sure plan fees are reasonable.
Because of different providers and different ways to get paid in the field, this disclosure levels the playing field so that businesses can see which fees fall into which buckets. It gives them a comparison tool so they can fulfill their fiduciary responsibility.
Another change is the electronic filing of plans’ Form 5500. This year, plan sponsors are required to obtain the credentials from the Department of Labor and file the Form 5500 electronically. Businesses should work closely with their providers to make sure that those 5500 reports are filed in a timely manner.
