Broker Check

Happy 401(k) Plans are Compliant 401(k) Plans

| May 02, 2023

In the retirement planning universe, a lot of emphasis is put on the investment selections of 401(k) plans.  I get it, that is the sexy side of the retirement universe, but a compliance infrastructure provides the solid foundation to support those fund options.  Unfortunately, even the best-looking plans can break down under the heavy weight of ERISA violations.

Let’s take a look at a few of my favorite compliance topics and the questions you can ask of your plan advisors to promote a more compliance focused 401(k) plan:


Flat-Fee vs Asset Based 401(k) pricing

Flat-fee 401(k) pricing is gaining more traction as small business owners look for a more transparent solution in the wake of an uptick in ERISA litigation.  Bringing advisory fees outside of the plan assets may be helpful given the increased tax credits for businesses, potentially driving down the internal costs per participant.  This also can lead to a more transparent relationship with your retirement plan team.  Some questions for Plan Sponsors to ask:

  • Is my Record Keeper pricing based on assets in the plan, number of participants, or both? 
  • How do I know what is a reasonable plan fee for my company and my employees, while balancing the needs of both?
  • Are the advisor’s fees invoiced directly to the business or built into the plan fees?
  • How can I tell how much my retirement team is truly being compensated so there can be accountability on behalf of the participants?   And who exactly pays for their services?


Efficient and ethical plan design

Retirement plans should be designed to meet the needs of both your business and your employees.  Even a plan skewed to mainly benefit the small business owner, who may not have employees, needs to be careful of potential compliance pitfalls.  While every plan is different, here are some common questions for Plan Sponsors to ask:

  • What should our annual fiduciary training cover to provide the proper training for the trustee(s) of the plan?
  • Are employee outcomes driven through pure education or marketing pitches by the plan’s investment team?
  • How can my retirement plan avoid repeating mistakes such as top-heavy testing failures and late participant deposits?
  • Does our investment lineup offer enough diversification for personal choice while adhering to the fiduciary spirit of trying to limit large losses?
  • How do I know that my IPS is actually being followed? And what can I do if it isn’t?




Enders Wealth Management

37800 Van Dyke Ave, Suite 125

Sterling Heights MI 48312


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