Many employees complain of a lack of good fund options in their 401(k) plans, whether it is their high fees, poor performance or lack of diversification. If your current 401(k) offerings are less than ideal, there are steps you can take to make it better, according to an article in U.S.A.Today.

•    Carefully review your fund options. Compare your plan’s funds to their respective benchmarks. If they aren’t doing well in comparison to the benchmark indexes, employees may feel like they have to invest outside of the plan.
 
Also, you may want to consider less-costly Index Funds. Many retirement plans offer some type of index funds (approximately 90%, according to USA Today article). These funds are cheaper than other types of funds because they are not actively managed. They also tend to be less volatile and perform well over time. Target Dated Funds, which base fund allocation on the participant’s expected retirement date, are another good option to consider.

•    Don’t discount your employer matching contributions. Employees consider matching contributions to be free money. Even if your funds are not performing well, this can potentially be offset by a good matching contribution.


At NADART, we are proud to be able to offer plan sponsors and participants low-cost 401(k) plans that feature a broad variety of investment options including Target-Dated Funds and index funds. We also have the Roth 401(k) for employees looking for an  additional tax-savings option. If you are interested in learning more about how NADART can help you and your employees with your retirement needs, contact a NADART representative at (800) 462-3278, ext. 7161 or e-mail nadart401k@nada.org.