Page 469 - DCAC February 2024 Files

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time, to hold onto these small balances. Recordkeeping providers overseeing the investments you make available in your plan, and it
generally price their services based on average account balance, arguably adds very little risk to maintain that oversight even for small
so any smaller balance participants can drag down that average, balances.
increasing fees for everyone. “…and if I stay, there will be double.”
The Clash, Verse One: “If you say that you are mine, I’ll be here ‘til If you allow terminated participants to stay in your plan, there
the end of time.” is a fiduciary responsibility on your part to make sure that these
Consider another Englishman, Sir Issac Newton, admittedly less participants don’t go missing. Many move on, both physically and
a rocker and more a scientist: his first Law of Motion taught that mentally, when they leave a job and often forget to provide an
objects at rest tend to stay at rest unless compelled to change by the updated or forwarding address. Uncashed RMD checks, returned
action of an external force. Inertia is just as real for plan participants. mail, no beneficiaries on file…all are signs that a participant may
People tend to behave like those objects and can be resistant to have forgotten or abandoned their retirement assets. Finding those
change, or at least find change inconvenient. For participants in your participants is a necessary obligation for employers. For those
retirement plan, expect that they will tend to stay in your plan “’til plan sponsors who pay the recordkeeping fees on behalf of their
the end of time” unless you give them a polite nudge toward moving participants, you’re now paying for someone that no longer works
those assets out. for you and may not even be aware that they have an account in your

“If I go there will be trouble…so come on and let me know.” plan. If participant-paid, recordkeeping and other fees may quickly
and significantly erode whatever balance remains.
Participants don’t always make the best financial decisions when
they do things alone. Without proper education and guidance, some “This indecision’s bugging me (esta indecisión me molesta).”
may do some ‘emotional investing’ (selling low when it doesn’t feel We know that participants tend to look to their employers to help
good and buying high when things seem rosier) or take their funds them in making investment decisions for retirement savings. We
out of their retirement plan to use for non-retirement purposes. also know that there is a cost to having these participants in the
Easy as it may seem to kick out former employees and leave them plan, and the soft costs to keep track of them. So, you gotta let me
to fend for themselves, a sense of paternalism may instead spur know, should I stay or should I go? Determine what is best for your
plan fiduciaries to at least help oversee what little assets they have participants, even the ones that no longer work for you. The 1980’s
entrusted to them. Sound fiduciary processes should be in place for are counting on us to let them know.

"We know that participants
tend to look to their employers
to help them in making
investment decisions for
retirement savings. We also
know that there is a cost to
having these participants in the
plan, and the soft costs to keep

track of them. So, you gotta
let me know, should I stay or
should I go?"

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