MAKING A GOOD 401(k) PLAN EVEN           BETTER            Presented by:       Richard W. Rausser, CPC            Vice Pre...
Your Retirement Plan Is An Important   Factor In Your Credit Union’s Success• Retirement plans represent a large expense  ...
Make Your 401(k) Plan Work Harder                    For You• Define what you want to accomplish with your  plan• Ensure t...
Aligning Your 401(k) Program With Your               Corporate Benefits Strategy• Consider these factors:    Participant ...
Measuring The Effectiveness Of Your                  401(k) Program• Begin by benchmarking specific plan features• Evaluat...
Eligibility• Employers are making it easier than ever for  employees to participate in 401(k) plans• Relaxed eligibility a...
Salary Deferral Rates• Are participants maximizing deferral rates?• What are your highly compensated employees  able to de...
Employer Contributions• The majority of 401(k) plans offer matching  contributions• Is your match designed to maximize def...
Step Up Contributions• To help increase participant deferral rates,  many plans are providing “step-up”  contribution feat...
Design Trends—Automated Solutions• Automated solutions have a positive impact on  participant behavior and participation• ...
Automatic Enrollment• Automatic enrollment can help achieve  satisfactory participation rates, but can have  unintended co...
Automatic Contribution Arrangements Two types of automatic contribution arrangements:• Qualified Automatic Contribution Ar...
Qualified Default Investment Alternative• Investment elections under an automatic  enrollment/contribution arrangement inv...
Roth 401(k) Option• A Roth 401(k) option combines the features of a  traditional 401(k) with a Roth IRA, providing  employ...
Safe Harbor Plan Design• Adopting a Safe Harbor 401(k) plan design allows  an employer to avoid discrimination testing of ...
Plan Investments• Consider the clarity of your plan’s investment  platform and ease of use• Does your plan have an investm...
Asset Allocation• Asset allocation decisions comprise more than  90% of the variability of a portfolio’s  investment perfo...
Investment Policy Statement• A plan’s Investment Policy Statement (IPS)  serves as a guide for evaluating and monitoring  ...
Fiduciary Responsibility• How important is fiduciary responsibility to  your management and Board of Directors?• Do they t...
Plan Fees• Do you completely understand all 401(k) plan  fees and expenses?• Who bears the cost of plan fees—the plan  spo...
Employee Education• Ensure participant education strategies are  suited to your plan’s demographics at the  micro level• E...
Next Steps•Initiate review of retirement benefits strategy and evaluate how well it aligns with your credit union’s corpor...
About The SpeakerRichard W. Rausser, CPCVice President, Consulting ServicesRich oversees Pentegras Consulting, Product Dev...
Thank You           Questions?Contact us at www.pentegra.com      Richard W. Rausser    rrausser@pentegra.com         800....
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Making a Good 401(k) Plan Even Better (Credit Union Conference Presentation)

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Is your credit union taking advantage of today’s best practices for 401(k) plans? Benchmarking your plan’s administration, management and recordkeeping practices against industry standards can help ensure that you’re getting the most out of your program. In this 2011 NAFCU Annual Conference session you will learn how to use your plan data to reveal patterns of activity that may prompt you to make changes that improve your program. Understanding what participants are doing - or not doing - can make a good retirement plan even better, and reduce costs, manage risk and increase overall appreciation for your benefits program.

Presented by Richard Rausser, Vice President, Consulting Services, Pentegra Retirement Services

More info at http://www.nafcu.org/pentegra

Published in: Business, Economy & Finance
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Making a Good 401(k) Plan Even Better (Credit Union Conference Presentation)

  1. 1. MAKING A GOOD 401(k) PLAN EVEN BETTER Presented by: Richard W. Rausser, CPC Vice President Pentegra Retirement Services National Association of Federal Credit Unions l www.nafcu.org
  2. 2. Your Retirement Plan Is An Important Factor In Your Credit Union’s Success• Retirement plans represent a large expense that credit unions incur to attract, retain, and motivate employees National Association of Federal Credit Unions l www.nafcu.org
  3. 3. Make Your 401(k) Plan Work Harder For You• Define what you want to accomplish with your plan• Ensure that your plan design aligns with your corporate benefits strategy National Association of Federal Credit Unions l www.nafcu.org
  4. 4. Aligning Your 401(k) Program With Your Corporate Benefits Strategy• Consider these factors:  Participant demographics  Maturity of credit union  Competitive considerations  Benefits philosophy  Compensation strategy and budget  Overall cost and benefit objectives “cost vs. adequacy” National Association of Federal Credit Unions l www.nafcu.org
  5. 5. Measuring The Effectiveness Of Your 401(k) Program• Begin by benchmarking specific plan features• Evaluate each feature in terms of how itcompares to:  Industry standards  Your competitors National Association of Federal Credit Unions l www.nafcu.org
  6. 6. Eligibility• Employers are making it easier than ever for employees to participate in 401(k) plans• Relaxed eligibility and enrollment requirements National Association of Federal Credit Unions l www.nafcu.org
  7. 7. Salary Deferral Rates• Are participants maximizing deferral rates?• What are your highly compensated employees able to defer?• Are participants using the plan effectively to meet their retirement goals and achieve financial security? National Association of Federal Credit Unions l www.nafcu.org
  8. 8. Employer Contributions• The majority of 401(k) plans offer matching contributions• Is your match designed to maximize deferrals? National Association of Federal Credit Unions l www.nafcu.org
  9. 9. Step Up Contributions• To help increase participant deferral rates, many plans are providing “step-up” contribution features National Association of Federal Credit Unions l www.nafcu.org
  10. 10. Design Trends—Automated Solutions• Automated solutions have a positive impact on participant behavior and participation• Education alone does not drive participant behavior• “Studies show that if people default in, they stay in.” Dallas Salisbury, Employer Benefits Research Institute National Association of Federal Credit Unions l www.nafcu.org
  11. 11. Automatic Enrollment• Automatic enrollment can help achieve satisfactory participation rates, but can have unintended consequences National Association of Federal Credit Unions l www.nafcu.org
  12. 12. Automatic Contribution Arrangements Two types of automatic contribution arrangements:• Qualified Automatic Contribution Arrangement (QACA)• Eligible Automatic Contribution Arrangement (EACA) National Association of Federal Credit Unions l www.nafcu.org
  13. 13. Qualified Default Investment Alternative• Investment elections under an automatic enrollment/contribution arrangement invested in a Qualified Default Investment Alternative (QDIA) National Association of Federal Credit Unions l www.nafcu.org
  14. 14. Roth 401(k) Option• A Roth 401(k) option combines the features of a traditional 401(k) with a Roth IRA, providing employees with a potential source of tax-free retirement income• Consider adding a Roth Conversion feature National Association of Federal Credit Unions l www.nafcu.org
  15. 15. Safe Harbor Plan Design• Adopting a Safe Harbor 401(k) plan design allows an employer to avoid discrimination testing of employee elective deferrals and/or employer matching contributions (ADP/ACP testing) National Association of Federal Credit Unions l www.nafcu.org
  16. 16. Plan Investments• Consider the clarity of your plan’s investment platform and ease of use• Does your plan have an investment philosophy, or an inventory of funds? National Association of Federal Credit Unions l www.nafcu.org
  17. 17. Asset Allocation• Asset allocation decisions comprise more than 90% of the variability of a portfolio’s investment performance over time• Automated solutions help do-it-for-me investors—and nearly 80% of participants consider themselves this type of investor National Association of Federal Credit Unions l www.nafcu.org
  18. 18. Investment Policy Statement• A plan’s Investment Policy Statement (IPS) serves as a guide for evaluating and monitoring the plan’s overall investment portfolio and investment options National Association of Federal Credit Unions l www.nafcu.org
  19. 19. Fiduciary Responsibility• How important is fiduciary responsibility to your management and Board of Directors?• Do they truly understand the risk associated with this role?• Trend toward outsourcing this responsibility with the rise of multiple employer plans that offer comprehensive fiduciary relief National Association of Federal Credit Unions l www.nafcu.org
  20. 20. Plan Fees• Do you completely understand all 401(k) plan fees and expenses?• Who bears the cost of plan fees—the plan sponsor, participant, or both?• Increased emphasis on fee disclosure and transparency with new DOL regulations that take effect January 1, 2012 National Association of Federal Credit Unions l www.nafcu.org
  21. 21. Employee Education• Ensure participant education strategies are suited to your plan’s demographics at the micro level• Employees understand how 401(k) plans work, today there is greater emphasis on retirement readiness and using the plan to achieve financial goals National Association of Federal Credit Unions l www.nafcu.org
  22. 22. Next Steps•Initiate review of retirement benefits strategy and evaluate how well it aligns with your credit union’s corporate goals•Perform a plan review to determine the effectiveness of your 401(k) and other retirement benefit programs•As a NAFCU Services Preferred Provider for qualified retirement plans, Pentegra offers NAFCU members a free retirement program review and analysis National Association of Federal Credit Unions l www.nafcu.org
  23. 23. About The SpeakerRichard W. Rausser, CPCVice President, Consulting ServicesRich oversees Pentegras Consulting, Product Development, Client Transition andMarketing practice groups. Rich joined the Pentegra organization in 1997 and hasmore than 25 years of experience in the retirement benefits field. His extensiveknowledge of the retirement plan industry includes a unique mix of small companyand Fortune 500 level consulting work, as well as strategic product development. Hisknowledge of the retirement plan marketplace, and insights in benefit plan design andcustomer needs have been instrumental in not only expanding Pentegra’s productlineup and customer base, but in helping clients nationwide design effective benefitsand compensation strategies. He is a frequent speaker on retirement benefit topics.Rich is a Certified Pension Consultant (CPC), a Qualified Pension Administrator (QPA), aQualified 401(k) Administrator (QKA) and a member of the American Society ofPension Professionals and Actuaries (ASPPA). He holds an M.B.A. in Finance fromFairleigh Dickinson University and a B.A. in Economics and Business Administrationfrom Ursinus College. National Association of Federal Credit Unions l www.nafcu.org
  24. 24. Thank You Questions?Contact us at www.pentegra.com Richard W. Rausser rrausser@pentegra.com 800.872.3473 National Association of Federal Credit Unions l www.nafcu.org

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