What are the latest Trends in 401(k) plans with respect to small businesses and data security?

  1. I have been reading a lot about the retirement saving issues in the U.S. lately. And it seems that the 401(k) is the primary solution for tackling this problem. I run a small business in a rented office space in California. I wish to know whether I need to offer 401(k) plans to my employees. Also, what are the data security risks that need to be considered with regards to 401(k)? Brian, California

Hi Brian, yes it’s true that there is a renewed emphasis on the 401(k) plans and they are being viewed as the primary solution to the retirement savings in the United States.

With increased awareness of the crisis around retirement savings, several states in the country are now waking up to take powerful measures. The steps to make retirement simpler and largely automatic has led to an increased possibility of individuals participating in the 401(k) plans being offered by their employers.

You will find that numerous states have taken the initiative to create legislation which requires all businesses (except very small ventures) to offer as well as register their employees in a 401(k) plan. Some of the states that are actively working on this legislation include California, Illinois, New York, Oregon, Massachusetts, Virginia and Minnesota.

The aim of creating such legislation is to allow bankruptcy experts to withdraw the retirement plan assets of employees from the insolvent firm in a quick and efficient manner.

There has been a lot of publicity of the data breaches faced by the Republican and Democratic parties in the country. All this publicity has greatly raised the concern for data security, even for retirement plans such as 401(k). It is true that retirement savings plans are also subject to hacking risks and savvy companies are making consistent efforts to protect the critical information in their employees’ 401(k) accounts.

There was a recent article published by Jackson Lewis that highlighted existing legislation as well as the security measures that employers can take in the future in order to protect sensitive data.

Some of them include the following:

  • Implementing due diligence for all information and security measures while choosing and supervising vendors.
  • Offering training to personnel on various legal and fiduciary responsibilities.
  • Creating privacy contingencies for contracts developed with service providers.
  • Providing restricted access to all sensitive data to personnel.
  • Creating written rules, policies and processes that have details about the federal laws and applicable state for personnel.

You can consult 401keasy for a quick and easy setting-up of your 401(k) account.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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