Building a Better Retirement for Nonprofits

This article was co-authored by Patrick Brault, principal and regional director at Wipfli Hewins Investment Advisors.

Last year, our colleagues Erika Young and Angie Whiteside co-authored an article on the differences between 401(k) and 403(b) plans, and how nonprofits can choose the best option for their employees. You can read their take here.

Unfortunately, retirement readiness across the nation is still concerning. Recently, Argentum — a leading, national trade association serving companies that support senior living communities — released the news that Americans face an alarming $7.7 trillion gap between the funds they’ve saved and their goals in retirement.1

Clearly, well-meaning, elected officials see the need for helping every employee — regardless of the industry or the size of their employer — save for retirement. But the situation is especially dire for nonprofit entities in the healthcare sector, as many owners have limited budgets to supplement their employees’ retirement nest eggs.

What can nonprofits do?

In light of the Department of Labor (DOL)’s new fiduciary rule, leaders of nonprofits may consider taking a second look at their retirement plan to ensure that it is the most cost-effective option for their employees, and most importantly, is compliant with regulatory requirements.

New Fiduciary Rule - Senior Living Providers

The reason for this? The fiduciary rule has shed a new light on the often-exorbitant retirement plan fees placed on working Americans — and employers of all sizes and industries are being held accountable.

In May, a new class-action lawsuit was filed against sponsors who oversaw a plan with just $9 million in assets, citing excessive 401(k) fees.2 And earlier this month, Yale University, New York University and the Massachusetts Institute of Technology — three of the nation’s most prestigious educational institutions — were served with hefty lawsuits and accused of allowing their employees to be charged with excessive retirement plan fees.3

If you currently sponsor a retirement plan, it’s important to recognize that you have accepted the fiduciary responsibility on behalf of your employees to ensure that their best interests are placed first. This responsibility goes beyond plan oversight: it means your plan fees must be fair and reasonable; your plan investment options must be diversified and sound; and the decisions you make must be thorough and documented.

Running a nonprofit organization is no simple task — you wear dozens of hats on a daily basis, and you’re not expected to navigate this path on your own. At Wipfli and Wipfli Hewins, we help ensure that our clients understand their fiduciary responsibilities and have developed a resource that can help make the process a bit easier.

Our fiduciary checklist outlines three essential steps you can take to assess whether you’re managing your retirement plan effectively: Download the Checklist

Taking action

With the advent of the fiduciary rule and new technologies, it’s possible for nonprofits to implement a 401(k) plan with high-quality investments and lower costs. Your employees are in the business of “doing good” and are passionate about making a positive impact on the world around them; and importantly, they’re integral to the growth of your organization. Therefore, it’s important that your retirement plan program offers ongoing education and support, as well as flexibility in terms of plan enrollment, so your employees can opt into the plan efficiently and on their own time.

As advisors within the retirement plan arena, we know that there are more options emerging for nonprofits to develop this type of comprehensive program; thanks to the DOL’s ruling, you are no longer limited to high-cost alternatives.

That said, it’s crucial to make sure you conduct a strong due diligence process when choosing a plan advisor or evaluating your current advisor. At the very least, you should be proactive in reviewing your retirement plan periodically to ensure that your all-in fees are reasonable (compared to similar-sized plans within your industry); a strong percentage of your employees are participating in the plan; and the plan meets compliance-testing requirements. You should also review the quality and viability of your investments. At Wipfli and Wipfli Hewins, we offer this type of analysis as a complimentary service to our clients to help ensure their plans measure up. Stop by our website to learn more.

The path to a better retirement for your employees starts with you. As a retirement plan sponsor, you can play a key role in instilling confidence in your workforce and helping ensure they can spend their post-working years worry-free. The right plan can also help you put your organization on track for success, and allow you to expand your vision and mission for the future.


Want to find out if your plan stacks up?


Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Larry Lester

Partner, Nursing Home Consulting, Wipfli LLP

Larry Lester is a partner in Wipfli's Nursing Home Consulting Group, based in Eau Claire, WI. Larry has extensive experience in financial management for long-term care facilities and in-depth knowledge of Medicare and Medicaid programs.

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Building a Better Retirement for Nonprofits

time to read: 3 min