Retirement 101 on 401(k)s

Christina Graceffa has been a human resources manager for a long time, but is new to handling a 401(k) plan.

The HR pro from the Brewer Co. thought she would be the only one in that category when she took her seat at an all-day seminar held by The Plan Sponsor University in Milwaukee. After listening to some of the questions from the 18 other plan sponsors in attendance, she felt better about what she didn’t know.

“I was worried that this was going to be over my head,” Graceffa said. “It gave me the understanding that you’re not alone.”

Lots of HR and other managers get saddled with the task of running their company’s 401(k) but haven’t been taught how to do it, said Steff Chalk, Plan Sponsor University’s executive director. The university, based in Jupiter, Florida, travels throughout the country with daylong seminars taught by staff and adjunct local associates to help 401(k) plan managers learn more about their responsibilities. It is for-profit — the providers who present pay the fees — and the seminar is free for plan sponsors. If a provider tries to sell a product or service, Chalk said he stops it immediately.

“Many of these people have had no training, and now they are in charge of a 401(k),” Chalk said. “We want them to get a better understanding of the whole picture.”

The attendees at the Milwaukee seminar manage 401(k) plans covering nearly 4,000 participants, said Todd Barden, an adjunct lecturer for the university and senior retirement plan consultant for Great Lakes Retirement Plan Consultants. The aim of the event was to expose attendees to new ideas and goals.

One goal talked about throughout the day was 90-10-90. It’s the ideal combination for a successful plan where there is 90 percent participation, 10 percent employee contribution rates that do not include the employer match, and 90 percent usage of professionally managed accounts, such as target-date funds. When designing a plan with these numbers, it’s hard for employees to go wrong.

“If we leave all the decision-making to employees, many times they make the wrong choice,” Barden told the group.

A large part of the seminar was spent talking about what works and what doesn’t in 401(k) plans. Participants broke into small groups to discuss issues. Then, leaders from each group presented top winners and losers. Things that worked included automatic enrollment, employer match, targeted education and bilingual communications.

Unfortunately, there were more things wrong with plans than right, participants agreed. Top on the list of things not working included compliance testing, millennial buy-in, boosting savings rates, multiple loans and weak or no company match.

When the lists were complete, participants talked about the issues as they related to their 401(k) plans. There was open conversation with questions and suggested answers mostly coming from seminar participants.

“Getting information that way is much better than hearing from me,” Chalk said. “Sharing content is much more valuable. We want them to know their challenges are not unique.”

The Plan Sponsor University started two years ago and has held about 150 seminars as of March, Chalk said. Typical events have between 15 to 18 plan sponsors with a dozen advisers who help with the daylong lecture. The university is affiliated with The Retirement Advisor University (Chalk also is executive director of the retirement university) as well as 401kTV, a website showcasing videos of topics covered at the seminars.

Plan Sponsor University likes to keep its events small and at local universities so participants don’t feel intimidated or pressured to purchase products or services.

“This is more of an opportunity for us to help them work through some things that they may have been thinking about but don’t really know enough to come to any conclusions,” Chalk said.

Pamela Zacharias, firm administrator for business law firm Meissner, Tierney, Fisher & Nichols in Milwaukee, said she came to get more information about plan design and fiduciary responsibilities. Overall, she felt her plan was doing well with its 4 percent match on 5 percent employee contribution, but she learned there were more features that could strengthen results for workers at her law firm.

“My eyes were opened up to a lot of issues, and now I have a lot of questions,” Zacharias said. “I’d like to look into auto-escalation and changing our match so it inspires people to contribute more.”