---
title: "Retirement Plan Rx"
date: 2017-06-20
author: "Site Admin"
featured_image: "https://pinnacle-plan.com/wp-content/uploads/2017/06/stethoscope-green-zoomed-out.avif"
categories:
  - name: "Newsletters"
    url: "/category/newsletters.md"
---

# Retirement Plan Rx

[![](http://pinnacle-plan.com/wp-content/uploads/2017/06/stethoscope-green-268x300.jpg)](http://pinnacle-plan.com/wp-content/uploads/2017/06/stethoscope-green.jpg)View This Newsletter: [Retirement Plan Rx](http://pinnacle-plan.com/wp-content/uploads/2017/06/2017-Benefit-Insights-4-Retirement-Plan-Rx.pdf)

Overview: The latest news regarding retirement plans has centered around service provider fees. While fees are a highly important aspect of managing an employer-sponsored retirement plan, they are not the only metric of your overall retirement plan’s health.

Bonus Material:

- Rise of the Machines: Robo-advisors are a class of auto-adviser that provide financial advice or portfolio management online with minimal human intervention.
- Participant Loans – Benefit or Detriment: Account leakage due to participant loans is a significant issue in retirement planning with some experts even calling it a crisis.

Summary:

- Types of Retirement Plans 
    - Historical focus on defined benefit plans or “pensions”
    - Migration to defined contribution plans such as 401(k) plans
    - The benefits of any 401(k) plan can vary drastically depending on the annual funding decisions of the plan sponsor
    - Studies show less than favorable employee participation rates
- Getting Employees to Join the Plan 
    - Education: 
        - The best way to encourage participation is to keep the plan straight forward, accessible, and provide access to great educational tools.
        - Most financial advisors are more than willing to help in this endeavor
    - Automatic Enrollment: 
        - Automatic enrollment allows an employer to enroll an employee into the company’s plan at a determined contribution percentage unless the employee makes an election not to contribute, or an election to contribute a different amount
    - Roth 401(k) Option: 
        - Under the Roth 401(k), employees may contribute funds on a post-tax elective deferral basis, in addition to, or in place of, pre-tax elective deferrals under their traditional 401(k) plans
    - Mobile Options: 
        - Providing low-cost apps allows workers to take care of benefits on the devices that they are already familiar with and constantly using
- Increase Deferral Rates 
    - Increasing Automatically Enrolled Contributions: 
        - The typical 3% default contribution is usually not touched after the initial enrollment, so increasing the rate of the default contribution can further a participant’s chances of a healthy retirement
    - Stretching a Match: 
        - To persuade participants to increase contributions, some plan sponsors have adopted a stretched match as a form of motivation
    - Automatic Escalation: 
        - With auto-escalation, the contribution level is automatically increased at regular intervals, typically 1% a year, until it reaches a preset maximum.
- Utilizing Your Resources 
    - Interaction with knowledgeable plan advisors is a facet of retirement education that is underutilized
    - Future Possibilities: Auto portability just may be a pension innovation worth keeping an eye on

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Pinnacle Plan Design is a third-party administrator (TPA) for employer-sponsored qualified retirement plans. We specialize in retirement plan design, administration and actuarial consulting for 401(k)/profit-sharing plans, defined benefit plans, cash balance plans, and 403(b) plans. Pinnacle Plan Design proudly serves businesses nationwide.