Designing the Perfect 401(k) Plan
How would you design the perfect 401(k) plan? While there's no universally perfect plan, understanding the primary reasons companies adopt retirement plans helps guide the design process.
David Witz1 min read83 wordsA thought provoking question was asked: “how would you design the perfect 401(k) plan?” My initial reaction was that there is no such thing as a universally perfect 401(k) plan since the definition of “perfect” is subjective.
Features of the Perfect 401(k) Plan
- Safe Harbor matching feature to avoid the cost of discrimination testing
- Adoption of the automatic enrollment feature with auto re-enrollment each year
- Compliance with section 404(c) to avoid liability for participant investment decisions
- Compliance with section 404(c)(5) safe harbor using a Qualified Default Investment Arrangement (QDIA)
