PLANSPONSOR - June/July 2020 - 11

Tim Joyce, co-owner of Fidelus
Advisors, says this is a good time for
people to assess their readiness for retirement.
" They really don't know. They're just
looking at the total of the money they've
saved and don't know if it's enough and
where to start [to figure it out], " he says.
Offering participants advice-both
through technology and one-on-one
meetings with financial professionals-is
an important duty for plan sponsors, says
Ray Radigan, head of personal and corporate
trust groups at TD Wealth.
Many people are, understandably,
afraid in such an uncertain time.
According to Nancy DeRusso, senior vice
president and head of coaching at Ayco, to
allay this, they should take actions within
their control. " Without information, there
is more fear and paralysis. The first step is
to find out where they stand. They may be
surprised and see they're on track to retire.
If not, at least they've taken action to determine
their next steps, " she says.
Workers at that juncture should learn
how much they will need for retirement,
Joyce says, adding that most will need less
than they currently spend.
The cost of hobbies, travel and health
care may add to expenses, DeRusso
says, but financial help for children and
mortgage payments may get subtracted.
" People should also remember that the
money they were setting aside for retirement
they will no longer be setting aside.
That wasn't necessarily an expense, but
it is something no longer coming out of
income, " she notes.
Besides Social Security, pensions and
annuities, income may come from investment
and/or rental income, retirement
savings, cash savings, health savings
accounts (HSAs) and equity compensation
plans.
Sponsors that provide advice tools and
communications should personalize those
by way of their participant data, DeRusso
says. She also advises giving pre-retirees a
checklist showing them what to do in the
year before they retire. -Rebecca Moore
Small-Plan Fees Dip
2020'S RELEASE of the " 401k Averages Book " shows that the average total cost for a
small retirement plan-i.e., 50 participants/$2.5 million in assets-declined from 1.38%
to 1.37% over the past year, while the average total cost for a small plan is $681 per participant.
The numbers derive from a representative scenario compiled from research on
small plans by author Joseph Valletta. " Overall, fee disclosure and greater transparency
have helped drive down 401(k) fees, " he says. " But what we keep finding is large plans,
with larger average account balances, pay less than smaller plans. Plan advisers understand
this, but most participants at smaller companies are unaware of this gap. " -PS
50-Participant Plan / $2.5mm in Assets
Breakdown of Total Cost
Total Plan
Cost Per
Participant
$681
1.43%
1.39%
1.38%
2015
2016
Costs, Per-Participant Ranges
Range = middle 50%, from data sources
75th
percentile
$790
Average
$700
25th
percentile
$630
Source: " 401k Averages Book "
Investment
0.49%
Net investment
2017
1.38%
1.37%
2018
2019
Total Plan Cost, Plan Assets
1.37%
1.26%
0.11%
Recordkeeping
0.77%
Revenue sharing
Net investment
35.7%
7.8%
Trend in Total Plan Cost
In the study's scenario, the asset allocation
had experienced an increase in equities and
target-date funds since 2015.
Revenue sharing
Recordkeeping /
Adminstration
56.5%
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