The Society for Human Resource Management (SHRM) now offers the SHRM 401(k) Solutions by Raymond James program.
Employers can use it to shop for a retirement plan with better pricing, and it potentially saves them time by outsourcing significant liabilities and risks, and providing expertise to manage a 401(k) plan, SHRM said. For example, the plan offers outsourced fiduciary investment services, such as negotiated grid pricing at many of the leading record keepers and third-party administrators.
The program is not structured as a pooled employer plan, but it allows sponsors to achieve many of the benefits of pooling assets without going through a plan conversion or giving up control of their plan design.
It also offers a complimentary benchmarking report that uses data from an independent third party. The report by Raymond James allows employers to assess their current plan fees, have service providers compete for employers’ business, and identify where employers can upgrade quality and service while potentially reducing costs.
Raymond James is not affiliated with SHRM. The program is a branding name for the agreement between SHRM and Raymond James that is being offered to SHRM audiences with 401(k) retirement plan services.
The offering comes at a time when government leaders are discussing the critical role of 401(k)s as a tool to help U.S. workers save. The Setting Every Community Up for Retirement Enhancement (SECURE) Act, which former President Donald Trump signed into law in December 2019, promotes employer-sponsored retirement plans while easing plan administration. For instance, it increased the business tax credit for plan startup costs for small businesses to $5,000 in some circumstances, up from $500.
Proposed follow-up legislation now before Congress, dubbed SECURE Act 2.0, would further encourage small businesses to offer retirement plans.
The value of providing employees with a 401(k) plan was highlighted in a recent Schwab survey of 1,000 401(k) participants, which found that more than half (53 percent) of respondents said they were very likely to achieve their retirement goals. That’s up from 37 percent in 2020.
“On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020,” Schwab said in the report, noting that 91 percent of surveyed 401(k) participants described their financial health as “good” or “very good.”
“401(k) plans and health insurance again top the list of desired workplace benefits with more than 80 percent of participants saying these are ‘must-haves,’ ” according to that report.
This offering from SHRM comes at a time when workers are experiencing one of the most challenging economic times of their lives, observed Nick Schacht, SHRM-SCP, SHRM’s chief global development officer.
“Today, HR professionals are focused on helping their business make it to the other side of this pandemic and are looking to identify forward-thinking ways to be there for employees holistically,” he said.
“Now employers don’t have to do this alone. [This program] works side by side with employers, strengthening retirement plan administration and supporting the financial wellness of millions of employees and their families.”
The program, Schacht said, may be used by businesses of any size.
“We are giving the small and medium-size business access to the same powerful tools as larger organizations,” he said. “We can help existing plan sponsors evaluate and perhaps restructure their plans, or we can work with organizations to set up a plan from scratch.”
And although large businesses typically have better pricing already available to them, Schacht said they can benefit from the plan’s fiduciary outsourcing and accompanying risk mitigation.
Scott Curtis, president of Raymond James’ Private Client Group, described the program as an efficient and cost-effective option for small businesses. Defined contribution plans such as 401(k)s, he said, “are a primary savings vehicle for working Americans to provide retirement income in the future.
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