401(k) Plan Documents

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Hederal
Posts: 18
Joined: Thu Apr 27, 2017 8:18 am

401(k) Plan Documents

Post by Hederal »

Why wouldn't a small business owner who sponsors their company 401(k), have plan documents that allow every conceivable option available? As I learn more about what I might want to do, I have to check the plan documents to see if my own plan allows me to do it. Why wouldn't my TPA have simply given me a plan with every option in the world? Unless I'm misunderstanding the plan documents, they are simply words on a page that we pledge to follow. Whether the plan document is 50 pages or 500 pages long, it's all the same. Whether it allows for post-tax 401(k) contributions or not, it's all the same. Why wouldn't every 401(k) plan allow every participant to do anything they want?
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David Jay
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Location: Michigan

Re: 401(k) Plan Documents

Post by David Jay »

It’s not just words, there are actual costs associated with running 401K plans.

And actual costs associated with changing “words” (post-tax 401K plans are relatively recent offerings).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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JoMoney
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Joined: Tue Jul 23, 2013 5:31 am

Re: 401(k) Plan Documents

Post by JoMoney »

^ Yup ... There are administration costs to keep track of things like 'after-tax' contribution balances, as well as potential risks to the company if the plan becomes overly complex and the company/their administrative designee fails to properly perform some part of their obligation to the trust.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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