When companies set out to create or retool employee retirement programs, they usually have the right motivation. They want to achieve two things:

• Give employees a way to save for their retirement while reducing the income tax bite.
• Give the company a powerful tool for attracting and retaining talent.

But they often get the execution wrong. They assume retirement plans are essentially the same, so they choose one they already know or have heard about, or one that is apparently popular with other companies.

Then they mismanage what they’ve chosen. Hard and fast rules and regulations governing plan administration are ignored, put off, misinterpreted and sidestepped. If you are not careful, you'll be answering difficult questions from government oversight agencies or from plan participants and their lawyers.

None of this has to happen.

The retirement plan marketplace is chock full of options beyond the standard pension and the traditional 401(k).  Pensions and 401(k) plans are popular, but typically inadequate to fully meet their participants’ needs in sheltering income and accumulating assets. With some careful thought and strategizing, companies can find plans that:

• Cover the most people that are desired in the most equitable way possible.
• Ensure appropriate and targeted levels of participation.
• Offer maximum flexibility.
• Provide the best available options.
• Cost the least to run.

Nor are companies destined to be overwhelmed by the administrative function. Yes, plans must be selected and managed in compliance with strict rules, but they’re navigable. The key is appreciating the critical importance of compliance, and making that an organizational priority. Clear-headed understanding of the consequences of non-compliance can be a sufficient motivator.

The reality is that many existing retirement plans are broken. They were the wrong choice out of the gate. They no longer fit the needs of the company or the participants. They’ve been mismanaged. Participants are confused and want answers. They're one investigation away from being deemed out of compliance.

Companies looking to debut retirement plans can find themselves going down the same road. Lacking a clear understanding of goals, capabilities, choices and requirements, they lay the groundwork for trouble. Sources they think they can trust to competently shepherd the process – attorneys, CPAs and investment advisors – come up short in the knowledge and execution department.

The solution?  

1.     Commit to fully understanding the importance of a sound, effective retirement plan.  Then, commit to making choices that get participants on the best possible track to retirement security. Company retirement plans in the form of tailored solutions are the very best vehicle for helping business owners, managers and employees save for retirement while cutting their tax bills.

2.     Vow to manage and administer the plan by the book. Understand the rules and regulations, and know the consequences of failure for your company and your employees. Companies assume some weighty fiduciary responsibilities when they commit to plans that promise to secure and responsibly manage financial assets. They can’t be taken lightly.