Posted on by Jerome.Pfeffer


A huge responsibility rests on the shoulders of the members of a company’s retirement plan committee. With an influx of lawsuits, headline news, and changing regulations, it’s more pertinent than ever to be aware of what’s going on. We’ve complied 5 critical questions all plan sponsors should be asking their retirement plan advisors to assess the reasonableness of their fees and the quality of service.

Are you a retirement plan specialist?

To paint the picture, let’s start out with an analogy. If you suffered from chronic headaches, would you visit your primary doctor or seek a specialist? Many would start with their general practitioner and eventually request a specialist referral when the issue was not resolved. A similar story can be told for your retirement plan.

Did you know that 91% of retirement plans are run by non-specialists?[1] Many are being serviced by payroll providers, insurance brokers, and wealth managers who may offer retirement plan services but have not specialized in retirement plans.  This means that your throbbing headache might be diagnosed with Tylenol instead of addressing the root of the problem. Actually, 67.7% of retirement plans audited by the Department of Labor in 2016 were charged corrective fines to the tune of $573,000 on average.[2].  Thus, if your advisor is not a retirement plan specialist, you may want to consider a second opinion.

Who is our Recordkeeper?

Simply stated, your recordkeeper is the keeper of all of your records; they are an important player in your retirement plan. They also keep a close watch over how much and what type of money is in your plan and account for it in the appropriate “bucket.” In addition to tracking individual assets, your record keeper may provide other services such as:

Your recordkeeper is an integral part of your retirement planning team; these questions can help you discover if your recordkeeper is suitable for your plan type.

What does our share class mean?

A, B, C, I, N, R – trying to keep track of all of the various mutual fund share classes can sometimes feel like eating a confusing bowl of alphabet soup. Each of these are available options, however, and they may not be suitable investment vehicles for your particular retirement plan.  Investment advice is unique to every situation; and from a general educational standpoint, Institutional shares (I Shares) and Retirement shares (R shares) may be a good place to look for quality investment options.

{The chart below helps display which share classes and instances may be appropriate for you. Is our plan design aligned with our company’s retirement plan goals?

This is where working with a professional retirement advisor can potentially offer a lot of value. Plan design is crucial for any corporate-sponsored retirement plan. A well-designed plan should address the expectations of the business owner (or owners), valued team members, and loyal employees.  Below are a couple of examples of plan design options that could help you prepare your employees for retirement.

Examples of Plan Design Options

Profit Sharing

Profit sharing plans offer employers both design flexibility and discretion with respect to contributions. Employer contributions are not required and can be allocated in a number of ways. Maximum employer deductions are limited to 25% of annual compensation or the annual maximum contribution limit, whichever is less.

Safe Harbor

Safe Harbor plans allow owners and highly compensated employees to maximize deferrals. However, they do require specified employer contributions, and all contributions are immediately vested.

New Comparability

This allocation method allows an employer to divide its employees into different groups and allocate contributions based on group association. Keep in mind that this is a fairly technical option and you will need to work with a Third Party Administrator (TPA) on plan specifics. However, after the testing requirements are met, an employer may provide larger benefits to certain employee groups.


Should we consider automatic features?

In addition to sound plan design, advanced features such as automatic enrollment, automatic escalation, and qualified investment alternatives (QDIA) can help prepare your employees for a more meaningful retirement. Although many plan sponsors are reluctant to make paternalistic plan changes, seven out of ten participants are in favor of more aggressive defaults[3]

70% of plan participants[4]:

Managing your company’s retirement plan can seem overwhelming at times; however, it can be an extremely valuable benefit for your employees. If issues are uncovered by asking the questions laid out in this article, you may need to evaluate some key plan components.

Investment Solutions Group can help.  We offer comprehensive plan provider review and benchmarking that includes in-depth comparisons of plan features and fee transparency. You can leverage our knowledge and experience to help manage the burden of benchmarking, RFPs, plan design, and vendor analysis.

Hope you enjoyed this article, and please feel free to contact us for additional articles and insights.


Securities and Advisory Services Offered Through LPL Financial. A Registered Investment Adviser.
Member FINRA / SIPC.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. This material was prepared for Jerome Pfeffer’s use.

Investing in mutual funds involves risk, including possible loss of principal.

[1] Demasters, Karen. “Retirement Plan Advice Offers Opportunities.” FA Magazine, 20 Mar. 2014. http://www.fa-mag.com/news/retirement-plan-advice-offers-opportunities-17325.html

[2] EBSA. “Fact Sheet: EBSA Restores Over $ 777.5 Million to Employee Benefit Plans, Participants and Beneficiaries.” 2016. https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/ebsa-monetary-results.pdf

[3] NAPA Net Staff. “Participants Back Bigger Nudges.” Aug. 2016.

[4] American Century Investments. “Forth Annual Plan Participant Study.” Aug. 2016.