Dental professionals who have 401(k) retirement plans for their practices should consider a similar approach. For the financial health of your plan, the importance of an in-depth annual retirement plan review cannot be overemphasized. Just as a dental appointment involves much more than checking for cavities, an in-depth retirement plan review involves obtaining information to help you answer questions about several plan components. These may have an impact on helping you optimize your 401(k) plan.
Although most employers are interested in knowing how their 401(k) plans are performing, many plan reviews may be just a quick meeting to talk about investment performance during which plan costs and employee participation are not discussed. An in-depth evaluation may include analyzing multiple measurable facets of your plan to help you determine whether you are getting the best overall value for your plan.
And if you are the person who manages an employee benefit plan and its assets for your practice – known as the fiduciary –there may be more urgent reasons to conduct a full retirement plan review. Consider that if you’re not getting the information you need from your plan review, this could be cause for concern, both for your employees and your own retirement plans.
According to the Internal Revenue Service, it is essential for employers to review their plans because laws that affect retirement plans change frequently. “Ten major changes in the past 25 years and numerous smaller changes mean that what worked in the past may not work today. Plan language and operation will need to be changed to keep the plan within the law and to take advantage of increased benefit limits.”1
And like many other small and mid-size businesses, dental practice retirement plans also are essential for attracting and retaining employees. According to the fifth annual MetLife Study of Employee Benefits Trends2, the top benefits package priority for employers in the study was retaining key employees. The MetLife study showed a strong relationship between employee benefits satisfaction and job satisfaction, and that puts pressure on dental practices to offer attractive and sound retirement plans.
An analysis of one’s retirement plan does not have to be a complicated, time-consuming process. The practical benefits of an in-depth annual plan review are many, including helping you ensure that your practice is taking full advantage of tax relief opportunities, and attracting and retaining quality employees.
As you investigate the benefits of conducting an annual retirement plan review, consider whether your current review gives you enough information to help you answer these four questions about your plan:
Plan Operations
– Do you understand how your plan is being managed and are you able to determine whether multiple vendors are costing you time and money; if the customer support you receive meets your expectations; whether minimizing plan administration duties would help you simplify your life; and how proactive your provider is in proposing adjustments to help you keep your plan competitive?
Performance
– Do you know how well your investment choices have performed compared to those offered by other companies your size?
Fiduciary Responsibilities
– Do you know that part of an employer’s legal obligation as a retirement plan fiduciary is to follow a formal review and monitor their retirement plan provider? Interestingly, only 35 percent of employers in the Boston Research Group’s DCP +$5 Million Study3 consider themselves “very knowledgeable” about their requirement under the Employee Retirement Income Security Act of 1974 (ERISA) to conduct due diligence. Even though dental practices typically have fewer assets than those in the study, you may want to consider having a third-party conduct a plan review.
Employee Behavior and Feedback
– Do you know how many employees participate in your plan, and is it on par with participation in other practices?
As part of a quality plan examination, you should receive detailed results that provide information in response to the above questions. A consultation with a retirement professional can help explain the results of a plan review and help provide you with a clearer picture of how your plan is working—and what you can do to make it better.
The Boston Research Group’s 401(k) survey4 revealed that about one-third of 401(k) plan sponsors change plan investment options every two to five years or even less frequently, showing that plan sponsors may not be as intimately involved with the workings of their plans as is necessary.
Dental professionals have myriad responsibilities, including keeping their practices up to date. No ethical dental practice owner would consider staying in business with outdated knowledge and equipment. The same principle applies to a dental practice’s retirement plan strategies.
Your Personal Retirement
Research shows that 80 percent of small business owners expect to get some of their retirement income from a workplace retirement plan and the selling of their business.5 Having a healthy, well-functioning 401(k) plan can be integral to long-term personal retirement success.
Retirement professionals recommend conducting a thorough review annually, as well as when a major life change occurs which could impact your practice. As with many small businesses, personal situations can have profound consequences on professional lives. Professional and personal changes often can lead to changes in assumptions on which your strategy is based. And as the years pass, bringing retirement into closer view, rebalancing may be required in order to help you reach your target asset allocation.
And as Americans step into their retirement years, it is imperative to remember they must be prepared to cope with five key financial risk— longevity risk, inflation risk, asset allocation, excess withdrawal rate risk and health care risk. If these risks are not managed properly, secure personal retirement goals may not be realized.
In summary, dental practice professionals should consider an in-depth annual plan review for the sake of both their families and employees.
You owe it to yourself and your practice to work with a retirement professional who is able to assist you with an annual check-up that can help you keep your practice’s retirement plan functioning at a high level and give you peace of mind.
To learn more about a retirement plan for your practice, contact your Henry Schein Dental Sales Consultant who can provide you with literature from Fidelity Investments, or you may contact Fidelity directly at 866.467.0633.
- IRS Department of the Treasury Publication 4531 (7-2006)
- MetLife Study of Employee Benefits Trends, 4Q 2006
- Boston Research Group’s DCP +$5 Million Study
- 401(k) Exchange, Boston Research Group's DCP +5 Million study
- National Federation of Independent Business-National Small Business Poll-Retirement, Vol. 5, Issue 3, 2005
Available only to U.S. dental practitioners. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
For plan sponsor use only.
There are many kinds of workplace retirement plans. When determining which plan may be appropriate for your practice, you should consider all relevant factors including, but not limited to, contribution types and limits, ease of administration, investment options, initial costs and ongoing costs.
Fidelity does not provide legal or tax advice and the information provided above is general in nature and should not be considered legal or tax advice. Consult with an attorney or tax professional regarding your specific legal or tax situation.
Neither Henry Schein, Inc. nor any of its affiliates are a registered broker-dealer under the federal securities laws. The Fidelity retirement plan products offered under this discount program are offered by Fidelity Brokerage Services LLC, Member NYSE, SIPC, 100 Summer Street, Boston, MA 02110.
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