What’s the difference and why should you care?
Budget, flexibility and needs (and the size of your plan’s assets) are major factors when choosing the proper 401(k) retirement plan provider for your business. Deciding to use a bundled or unbundled approach depends on what you need. At one time, one or the other could have been a better option, but things change. LGT would like to walk you through the misconceptions and benefits of bundled versus unbundled 401(k) plans.
The Three Service Components
Three service components are needed to properly administer a retirement plan are:
A bundled provider manages all three components, making it a one-stop-shop for 401(k) retirement plans. This can work well for the plan sponsor, especially for plans under $1 million. The sponsor is able to use one provider for all of its 401(k) plan needs. A majority of the plan’s administrative expenses are offset due to fee-sharing arrangements between the mutual funds or group annuities and the provider.
An unbundled provider offers choice in plan design and, ultimately, maximizes retirement savings for participants. LGT would like to challenge the misconceptions and enumerate the benefits of picking an unbundled plan so that you and your business can make an informed decision.
Unbundled plans offer a sophisticated and customized design individually crafted to meet the needs of the plan sponsor. Conversely, most bundled providers design each plan to fit into the prototype (plain vanilla) document that they use for everyone, limiting the design choices for the plan sponsor.
One of the most important features of an unbundled plan is the opportunity to switch your investment and/or recordkeeping provider when there is a conflict, while maintaining your trusted TPA. Another important feature of an unbundled plan is having an experienced and technically educated TPA who knows all of the intricate aspects of your plan, assigned specifically to you, thus eliminating the frustration of not knowing who to contact when a need arises.
So bundled or unbundled?
Selecting the appropriate 401(k) plan design and service can be tough and overwhelming at times, which is where LGT would like to help. If you have questions about which choice is right for you, please contact Mike Radoff at email@example.com for help answering your questions and clearing away the confusion.