A 401k administrator is responsible for employee education and support, plan budgeting, and fund management. They may be an internal employee, a representative of the 401k provider, or a third party. The administrator manages plan costs, communicates new laws and regulations, and determines which investment funds should be offered to employees. Companies may have one to three plan administrators, depending on their size.
For companies that offer their employees a 401k retirement savings plan, a 401k administrator can play a key role in the success of the plan itself. The basic duties of the 401k administrator include employee education and support, plan budgeting, and fund management. The person who handles the administration of the plan may be an internal employee, a representative of the 401k provider, or a third party.
The 401k administrator is the person directly responsible for providing plan education and support to all employees. This may include conducting training sessions that emphasize various plan benefits and assisting in the creation and distribution of plan materials and enrollment forms. The 401k administrator often becomes the point person during open enrollment, when new employees join the plan for the first time, or when existing plan members need to make changes to their current plan details. The administrator is also in charge of communicating new laws and regulations passed that may affect the way the plan is run.
The 401k administrator can also manage the cost of running the 401k plan. The person in this role will often have a direct say in many of the items that affect the cost of operating the plan, including the plan benefits offered, the availability of certain funds in the plan, and the allocation of various plan costs to the employee, the plan, or a combination of both. While additional benefits and low employee costs can work well to increase engagement levels, reduced benefits and increased employee costs help keep company costs affordable.
With regard to fund management, the 401k administrator works directly with the plan provider to determine which of the many available investment funds should be offered to employees. This plays a significant role in contributing to plan costs and also serves as a determining factor in the level of satisfaction employees have with their funding offers. While there are plenty of mutual funds to choose from that offer consistently higher returns than others, these same funds often have higher investment costs associated with them. The 401k administrator should also be sure to include a variety of low-risk, low-return fund options, primarily for employees who prefer to invest their savings more cautiously.
A 401k plan can have one to three plan administrators. Midsize companies will often choose to keep this role internal, giving employees direct access to the services the administrator provides. Larger companies, on the other hand, often turn to outside companies to provide a plan administrator, which reduces the responsibility the company may have for how the plan is administered. Small businesses tend to rely on the administration services offered by their plan provider.
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