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  • Mark Nicholas

Introducing the NEW 401(k)!

Innovative communities shouldn't be stuck with a traditional 401(k). Northeast Wisconsin businesses can bring their retirement plan to a whole new level by joining the NEW 401(k), a pooled employer plan that flips the script on traditional service models and cost structures, getting employees the help they need and employers out of the 401(k) management business.

What is a pooled employer plan?

In December 2020, Congress passed the SECURE Act, which created a new type of retirement plan called a pooled employer plan, or PEP. The neat thing about a PEP is that it allows unrelated businesses to co-sponsor a single 401(k) plan. Think of it like a 401(k) co-op of sorts. One plan is adopted by several businesses, so no employer has to foot the bill for the whole service.

Aside from sharing a plan with others, what makes the NEW 401(k) unique?

Most plans have a few fatal flaws. They don't recognize the individual circumstances/needs of employees and plan fiduciaries don't have the expertise needed to identify and mitigate conflicted advice from service providers.

Often, a plan's success is measured in a silo. Metrics like participation rates, deferral rates, investment returns are used to tell how healthy a plan is. Where the plan looks unhealthy, often automated features are recommended to fix the problem. These are common features like automatic enrollment, auto-escalation, and qualified default investment alternatives. Unfortunately, many plan participants have complex financial situations and, in many cases, 401(k) shouldn't be treated as the top priority.

The structure of the NEW 401(k) is also unique. We have created an offering with fixed dollar fees for investment management and record keeping. Disconnecting these fees from asset levels allows the NEW 401(k) to get less expensive as it grows whereas other PEPs and single employer plans get more expensive as they grow, even though the work needed doesn't increase with asset levels. These simple changes result in significant savings for many businesses.

Will I lose all the bells and whistles that I love in my current plan?

The NEW 401(k) comes with robust set of features and plan design options. While we can't promise it has everything you want, it does include a full featured website experience, new comparability and age-weighted allocations, risk based model allocations, and many other features.

Will I still be a fiduciary?

There's no option available that fully relieves businesses of all fiduciary responsibility, but this is as close as you'll find. You will be responsible for selecting the NEW 401(k) and monitoring Transform Retirement. We will select and monitor any other service providers for the plan and either own or delegate other fiduciary responsibilities. .

Why isn't everyone doing this?

To really take care of participants and make the structural changes needed to be efficient, many providers would need to fundamentally restructure their business to remain profitable. As a newer business, Transform Retirement is able to start off on the right foot and make 401(k) as efficient and effective as possible.

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