Consolidation Corner

Mandatory distributions of small 401(k) accounts when participants separate from service provide many benefits for plan sponsors, including lower administrative costs and higher average account balances. However, these “automatic rollovers” also indirectly cause billions of dollars to leak out of the U.S. retirement system every year through cash-outs.

Have you ever tried to fix a leaky kitchen faucet yourself? If so, the task probably seemed simple at the outset. However, if you’re not an experienced plumber, you may have inadvertently compounded the small problem of a leak — perhaps by over-tightening a nut, pinching the washer, stripping the threads, or worst of all, splitting the pipe — and unintentionally made the situation worse, as well as expensive to fix.

Initiatives by employers to drive up savings and enrollment in their retirement plans over the past decade have generally followed the same three-pronged approach — participate, save, diversify.

New Year’s resolutions aren’t just for dieters and exercisers. The start of a new year is an ideal time for retirement plan sponsor to assess the effectiveness of their plan. Virtually all plan sponsors have areas that are ripe for improvement. Here are five resolutions to make and keep in 2015 to ensure you have a smoothly-running, cost-effective plan than succeeds at preparing employees for retirement.