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Managing Your Firm's 401(k) Plan : A Complete Roadmap to Managing Today's Retirement Plans


Praise for Managing Your Firm's 401(k) Plan

"Managing Your Firm's 401(k) Plan provides an excellent source of information on 401(k) plan administration that both retirement specialists and human resources generalists will find extremely valuable. This book will prove to be an indispensible resource in any HR department library."

—E.W. Lee Achord, CEBS, Vice President, Talent Management & Benefits Administration, Wackenhut

401(k) plans hold trillions of dollars of retirement wealth in America. What started as a way to save a little extra money for retirement has now turned into a critical source of security for millions of people. This field has become a serious business, especially for the thousands of corporate officers and finance and human resource professionals that are relied upon to effectively design or manage their firm's 401(k) plan.

Written to assist finance and benefit professionals in becoming better informed consumers of plan services as well as empowered managers of their firm's 401(k) plans, this reliable resource puts the operation, oversight, and management of 401(k) plans in perspective, and focuses on the financial, fiduciary, and regulatory issues associated with it.

Filled with in-depth insights and expert advice, Managing Your Firm's 401(k) Plan offers unparalleled guidance on establishing effective governance practices, avoiding simple compliance errors, and maximizing plan design. Along the way, it also answers important questions, including what is your role in helping employees reach a secure retirement and what types of risks are you assuming?

Accessible and informative, Managing Your Firm's 401(k) Plan presents an objective overview of this vehicle and offers practical insights on its role in today's organization.

Managing a 401(k) plan is not an easy task, yet each year, thousands of corporate officers and finance and human resource professionals are relied upon to effectively design or manage their firm's 401(k) plan. In this role, the decisions they make will have a meaningful effect on the retirement wealth of their co-workers.

Nobody understands this better than Matt Smith, and now, with Managing Your Firm's 401(k) Plan, he focuses on the financial, fiduciary, and regulatory issues associated with 401(k) plans to help finance and benefit professionals become better informed consumers of plan services as well as empowered managers of their firm's 401(k) plans.

In addition to this information, Smith and his expert contributors at Aon Consulting help you answer fundamental questions such as:

  • What is your role in helping employees reach a secure retirement?
  • How does your plan design affect participant decision?
  • What kinds of risks are you assuming?

Other issues addressed along the way include:

  • The employer's role in the 401(k) plan
  • Establishing 401(k) plan governance
  • Managing the 401(k) plan's investment menu
  • Monitoring record keeper performance
  • Communicating a 401(k) plan effectively with employees
  • Helping participants manage their retirement income
  • And much more

While there are plenty of books on 401(k) plans written for individual investors, there are very few resources for professionals involved in 401(k) management, operation, or oversight. This book fills that void by helping you excel in plan design, establish effective governance practices, and avoid simple compliance errors.

MATT SMITH is Senior Vice President, National Defined Contribution Practice Leader, for Aon Consulting in the United States. Prior to his role at Aon, he was managing director of retirement services for Russell Investments. Smith has been involved with the design, implementation, administration, and asset management of defined contribution plans for over twenty-five years. He has written and spoken widely on topics involving defined contribution plans. Smith has been quoted by numerous trade and professional publications, including PlanSponsor, Employee Benefit News, and Pension & Investments.



Chapter 1: The Importance of the 401(k) Plan.

Baby Boomers Have Reached Retirement Age.

People are Spending More Years in Retirement.

Expenses in Retirement Are Increasing.

The Shift from DB to DC.

Sharing Responsibility.


Chapter 2: The Role of the Employer.

Why Do Employers Sponsor 401(k) Plans?

What Roles Do Employers Play?


Chapter 3: Measuring Retirement Readiness.

Replacement Ratios.

Improving Retirement Readiness.


Chapter 4: Establishing a 401(k) Plan.

How a 401k) Plan Works.

Establishing Plan Objectives.

Benchmarking Plan Design Features.

Plan Setup.

Segregation of Plan Assets.

Using Plan Assets to Pay Expenses.


Chapter 5: Plan Governance and Fiduciary Issues.

Who Is a Plan Fiduciary?

Basic Fiduciary Duties.

Allocating or Delegating Fiduciary Responsibility.

The Prohibited Transactions Rule.

Exemptions from Prohibited Transaction Rules.

Establishing Roles and Responsibilities.


Chapter 6: Protecting Yourself as a Fiduciary.

The Impact of Enron Litigation.

Consequences of a Breach of Fiduciary Duty.

The Voluntary Fiduciary Correction Program (VFCP).

Fidelity Bonds vs. Fiduciary Liability Insurance.


Chapter 7: Establishing and Managing Plan Investments.

The Investment Policy Statement for a Participant-Directed Plan.

The Investment Menu.

Pre-Diversified Portfolios.

Portfolio Construction.

Selection of Investments and Managers.

Monitoring Investments.

Complying with Section 404(c).

Employer Stock in 401(k) Plans.

Default Investment Option and Mapping.

Advice and Education for Plan Participants.

Brokerage Accounts and Mutual Fund Windows.

Socially Responsible Investing.


Chapter 8: Managing Your Plan's Operations.

Monitoring Your Service Provider.

Vendor Services.

Collecting and Using Vendor Metrics.

Service Agreements and Standards.

Operational Compliance.

Regulatory Compliance.

Changing Recordkeepers.


Chapter 9: Design and Management of Distribution Options.

Vesting Rules.

Distributable Events.

Nondiscrimination Testing Failures and Regulatory Limitations.

Forms of Distributions.

Optional Design Features.

Taxation Considerations.



Chapter 10: How Business Transactions Affect 401(k) Plans.

Why It Matters.

Business Mergers and Acquisitions.

Divestitures and Downsizing.

Options for Distressed Organizations.


Chapter 11: Financial Communication and Education for Participants.

Why Do You Offer a 401(K) Plan?

Communication Strategy.

The Implementation Plan.

Branding your Program.

Managing Vendor Communications.

Three Times…Three Ways.


Chapter 12: Helping Participants Manage Their Retirement Income.

In Plan or Out?

Risks of Managing Retirement Income.

Retirement Income Product Types.

Additional Product Features.