Quiz 29: Investing Retirement Assets

Business

The employers have large number of investment choices which are making their plans good. The employers should know about the investments, and financial planning, which shows that large number of employers don't focused to manage their plans in an effective manner. The employers can use number of different approached related to investor education. The department of Labour has mentioned four methods of investment- related data which is given by the employers, and they don't have any fear to get exposed themselves into the fiduciary liability. The safe harbors are provisions related to general plan, general financial, models of asset allocation, and investment information with investment materials. Hence, the safe harbors firms are using in an innovative approaches related to investor education.

A defined contribution plans is the one method of employer-sponsored retirement plans. Defined contribution plan means when the employees, and employers make contribution, and invest through funds over the time in order to save it for the retirement. The employers, and employees have some stakes in the provisions of plan investment of a defined contribution plan. It is the responsibility of the employer to make appropriate structure of the investment programs, to select the right investment managers, to monitor the investment performance, and communicate the provisions relate to critical investment to employees. In some typical plans, the employees are responsible to decide that how to invest the account balances, and assume all types of risk which is linked with the investment performance. In defined contribution plans, the employers, and employees should have full knowledge of investment principles.

The employers have large number of investment choices which are making their plans good. The employers should know about the investments, and financial planning, which shows that large number of employers don't focused to manage their plans in an effective manner. The plan sponsor can limit their fiduciary liability by giving permission to their employees, so they can make allocation in large number of investment options, it also provides particular minimum options which can span a range of some investment classes given. The employees get permitted to make some changes to their allocations. The employers should provide employees which have enough information for them in order to make informed choices which are among the number of options which are available. Such requirements are known as the safe harbor provisions under section 404(c).

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