Getting the most out of your 401k plan

I have been running an automobile dealership for over 8 years now, and currently have a total staff of about 8. Many members of my staff have told me that they have concerns over the manner in which their 401 k investments statements are drawn up. They say that they are unable to determine if they are actually saving enough for the future or not. Is there a solution to this?

Graham Whitfield
New York City, NY

Hi Graham,

When it comes to 401 (k) plans, the reality is that many providers only offer basic record-keeping. While your employees may not initially understand the complexities of a 401 (k) plan, you should attempt to educate them as much as possible such that they are able to calculate the savings they will make, with regard to their investment strategies.

Record-keeping of a 401 (k) plan can be an extremely time consuming and exhausting process. Your employees’ current 401 (k) provider is required to generate a statement for them, however in many cases, such record-keepers only offer basic statements, that are just about in compliance with legal standards. As such, this does not put your employees in any position of advantage. These basic statements are often not detailed enough for employees to adequately gauge whether their investment strategies are reaping enough dividends.

There is no easy solution to this. The importance of hiring a reliable 401 (k) provider such as cannot be understated. Nevertheless, if you or your employees wish to know the state of your 401 (k) plan on a monthly basis, you will need to address it on your own.

Determining if your investment strategy is effective or not will mean calculating employer matching contributions, administrative fees associated with transfers and withdrawals, as well as any other losses or gains made that affect your final balance. One of the best ways to keep track of this is to encourage your employees to create a spreadsheet themselves, and generate their own monthly or quarterly statements.

While this may initially seem like a tedious endeavor, once they familiarize themselves with the basic finance and accounting skills required, it will become much easier. Unless your employees maintain their own records, this information may be lost in time. To learn more about the kind of information you need to accurately calculate your 401 (k) retirements savings, it is also important that you take a look at the Global Investment Standards.