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2018 Top 401(k) Trends

HomeTown 401(k) Aligning with the Top 401(k) Trends of 2018 

2018 is already showing signs of a strong economy, with GDP being stronger than it has been during the majority of the recovery, a robust equity market, and unemployment continuing to fall.

The lower unemployment has resulted in worker shortages in many cities, and the competition for qualified workers in 2018 will be more intense. HomeTown 401(k) is committed to helping plan sponsors create and maintain a leading-edge 401(k) plan, that will enhance their benefit packages and stand out from their competitors. Here are 11 changes we will be reviewing with our plan sponsors as we continue into 2018.

  1. Inclusion of HSA information to coincide with Employee Education Meetings:
    1. HomeTown 401(k) provides monthly material to all plan sponsors, and HSAs have been a “hot topic”. We have already provided an easy-to-understand article on how HSAs and 401(k)’s can work together. This topic will continue to show up as we find valuable information to share.
    2. HomeTown 401(k) also conducts Financial Wellness programs and will be happy to customize a meeting to include the basics of an HSA and how it can work in conjunction with retirement savings.
  2. Addition of Socially Responsible Investment Information:
    1. Through our HomeTown 401(k) open-architecture plan, we can review and add a Socially Responsible fund/suite, to help engage participants in their investments.
    2. We’re then able to provide educational material to let participants know what an SRI is, and if it would be a good option for their portfolio. 
  3. Understanding Your Fiduciary Responsibilities:
    1. As a 3(21) Co-Fiduciary, HomeTown 401(k) provides plan sponsors relief in some of their fiduciary responsibilities, such as reviewing investments and providing employee education.
  4. Incorporation of Behavioral Economics/Finance:
    1. As we review a plan, we are able to see if plan design elements such as auto-enroll and auto-escalation would fit the client’s workforce.
    2. These elements make it easy for the employees to begin saving, and once enrolled, they are less likely to opt-out of the plan.
  5. Addition of Annual re-enrollment:
    1. Where applicable, HomeTown 401(k) will coordinate with the plan’s sponsor and record-keeper to do a re-enrollment of all employees.
    2. This would be in addition to the semi-annual education & enrollment meetings we provide.
  6. Stretching Matching Contributions:
    1. HomeTown 401(k) works with plan sponsors to determine a matching formula that best fits all participants. A Safe Harbor match is generally recommended, and we’re able work with a plan design specialist to stretch out the match and encourage saving.
  7. New Limitations on Loans:
    1. For the clients that do provide loans through the 401(k), HomeTown always addresses the downside of a loan, and discourages participants from utilizing that feature.
    2. For 2018, HomeTown 401(k) will be discussing with plan sponsors the possibility of amending the plan to either limit loans or remove them all-together.
  8. Selection of the Right QDIA:
    1. HomeTown 401(k) carefully selects and monitors the Qualified Default Investment Alternative, by choosing the appropriate Target Date Suite, in which most participants are invested.
    2. For our HomeTown 401(k) plan, we can also offer a managed suite of funds that work similar to Target dates, but are instead managed to reflect the participant’s age. We work closely with Wela Strategies, an Atlanta-based financial advisory firm, who manages the age-based fund.
  9. Addition of Participant Investment Advice:
    1. HomeTown 401(k) has been leading by example in the 401(k) industry, through our dedication to educational services for participants. Employees are encouraged to reach out to us with questions regarding their accounts, investments, and rollover options.
    2. We offer annual & semi-annual educational meetings that give the participants an overview of their plan. Additionally, our new Financial Wellness program builds from the normal enrollment meeting, to give employees a more wholistic view of their financial situation and goals.
  10. Use of Specialized 401(k) Investment Advisors:
    1. HomeTown 401(k) specializes and excels in 401(k) plans, and most referrals that we receive come from other investment advisors, knowing that there isn’t a conflict of interest in our goals.
    2. This allows us to focus on our clients and their employees to remain a valued partner to plan sponsors.
  11. Continued Emphasis on Financial Wellness Education:
    1. HomeTown 401(k)’s Financial Wellness program provides employees with new financial topics on a quarterly basis. We have created 8 modules that range from the different kinds of debt to how much house can a person afford.
    2. Employers are encouraged to provide us with specialized topics they feel will benefit their particular workforce.