Things to Know
Alden is here to educate our clients about retirement plans so they can make informed decisions as to which option works best for them.
There are a plethora of retirement plans out there, but it’s important to understand which one best fits your needs. The most common retirement plans are 401(k) plans, which are for profit-based companies like most private and public businesses, and their close cousins 403(b) plans, which are for non-profit companies like churches, public hospitals, and charities.
Things to Know About Retirement Plans
- Retirement plans can be broken down into two main types; insurance-based plans and non-insurance-based plans. Insurance based plans are the most common type for small and medium sized businesses generally with under 300 employees and under $20 million in plan assets. They can be sold and serviced by insurance brokers who may or may not also be financial advisors and knowledgeable about investing.
- Insurance brokers cannot give investment advice to plan participants, they can only provide employee education about investments. Non-insurance-based plans are generally offered by registered investment advisors or asset managers.Investment advisors can give employees investment advice and are generally very knowledgeable about investing.
- Each plan type can have pluses and minuses based on the situation of each retirement plan client and we believe companies should look to work with a company that can provide either type of plan.
Alden’s Fee Transparency Tip
If anyone trying to sell you a retirement plan tells you their service is “free” they are not giving you an accurate picture of your costs and who is earning them. We recommend that you ask them how they get paid before committing to a retirement plan. The fact is that their costs are buried in some other line item where the company they work for is earning fees from a service provider to the plan.