There is only one common thread about bad 401(k)

I always say one of the beauties of retirement plans is not one is alike. They are like snow flakes because every plan sponsor has a different retirement plan need based on the size of their business, profits, and demographics of their employees. So I’ve never held the belief that retirement plans come off the assembly lines in the way some retirement plan providers especially third party administrators (TPA) treat them.

While not every plan is the same, every poorly run retirement plan has the same common thread. It’s not high fees, it’s not revenue sharing, it’s not using a bad TPA. The common thread is a retirement plan sponsor and the decision makers of the Plan not exercising their Fiduciary duty in a prudent manner and having plan providers that are not supporting them.

So the $1 billion 401(k) plan that used retail share classes of mutual funds when cheaper institutional share classes of the same plan were available and the $3 million defined benefit plan that failed to cover the employees it needed to, suffer the same problem.

What makes a properly run retirement plan is a plan sponsor dedicated to their role as a plan fiduciary and having the right team of retirement plan providers to assist them and help them navigate the treacherous waters of sponsoring a retirement plan.

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