401(k) plans allow workers to contribute a portion of their pre-taxed wages to an employer-sponsored retirement savings plan. As an employer offering a 401(k) plan to your employees, you also assume certain responsibilities for the plan, called fiduciary responsibilities. Managing these responsibilities properly is extremely important on behalf of your employees’ savings—an experienced retirement planner can help you make sure you consistently meet your fiduciary responsibilities.
Understanding Fiduciary Responsibility
401(k) plans represent a type of defined contribution retirement plan, which grows an employee’s retirement savings through pre-tax wage contributions on the worker’s part. However, 401(k) plans also involve some type of investment vehicle, such as stocks or mutual funds. As a fiduciary of the 401(k) plan, employers incur certain responsibilities to help employees manage their savings. These responsibilities are governed by the Employee Retirement Income Security Act (ERISA) and include providing employees with investment-related information and adhering to minimum participation standards, benefit accrual, and funding.
Financial Advisors and Fiduciary Responsibility
As an employer offering a 401(k) plan to your employees, you must uphold your fiduciary responsibilities—if your employees believe you are not acting in their best interests, they have the right to file a claim against you for breach of fiduciary responsibility under ERISA. Thus, it’s important to make sure you are continually following the guidelines set by ERISA and upholding your responsibilities, which is no small task. Working with a retirement advisor to manage your 401(k) plan is the best way to provide excellent retirement investment options to your employees and ensure you are meeting all your responsibilities as a plan fiduciary to prevent lapses or breaches that could affect employee savings.
Do you need help managing your business’ 401(k) plan? Financial Directions, LLC, is pleased to offer retirement and investment planning and guidance for individuals and businesses in the Tucson area. Please give us a call at (520) 408-7777 or visit our website to find out more about how we can serve you.
