The players and how the relate to one another.
Tag: 401k
Looking at the inner workings of the 401k
Excerpted from article by: Clifton Linton, Senior Writer, mPower
So who are the cast of characters associated with a typical 401k Plan?
The cast:
Plan Sponsor: This is the employer. They establish the plan, set vesting conditions, implement investment limitations, matching contribution percentages etc.
401k Participant: This is the employee. The maximum amount that the employee can is determined by the IRS. The investments that the employee can make include mutual funds, individual stocks, and bonds. The plan sponsor’s recordkeeper will typically have a set of preferred plans.
Recordkeeper: Tracks contribution rates, investment selections, employer matching contributions, provides account statements, and maintains information about 401k loans that may be outstanding.
Trustee: Actually technically holds the assets. Has the exclusive authority and discretion to manage and control the assets of the plan. The trustee can be subject to the direction of a named fiduciary and the named fiduciary can appoint one or more investment managers for the plan’s assets.
Investment Manager: Offers the funds to the individual; managers the funds.
Useful resources for learning about the 401k industry
(SPARK) is an inter-industry professional association servicing mutual fund companies, banks, insurance companies, investment advisors, third party administration, record keepers and benefit consulting firms in the retirement plan industry
401khelpcenter a knowledge service that curates — finds, reviews, organizes and shares — the best and most relevant information for people who sponsor, advise, design, administer, make policy about, participate, or are otherwise interested in 401k and 403(b) plans.
Deparmtent of Labor Employee Benefits Security Adminstration. The mission of the Employee Benefits Security Administration is to assure the security of the retirement, health and other workplace related benefits of America’s workers and their families. We will accomplish this mission by developing effective regulations; assisting and educating workers, plan sponsors, fiduciaries and service providers; and vigorously enforcing the law.
Some useful tables about defined contribution and defined benefit plans: Here
Description of target date fund:Here
A 401k plan trustee:
http://www.verisightgroup.com/Home/Solutions/TrustServices.aspx