Appreciating The 401k



Staying up to date on ERISA compliance, scurrying around with SECURE 2.0 provisions, and keeping benefits competitive are all big lifts for plan sponsors these days. Take heart, though: employees really do appreciate the 401k. Here’s proof.

The Advantages

Based on data from year-end 2022, the Investment Company Institute shares an important reminder about the critical role employers play in sponsoring 401k plans: sponsoring 401k plans play in the lives of families: “Americans held $9.3 trillion in DC plans…, accounting for 27 percent of the $34.2 trillion in retirement assets and about 8 percent of household financial assets. Seventy percent of DC plan assets, or $6.6 trillion,were held in 401(k) plans, accounting for 19 percent of all US retirement assets.” Findings also underscore employee appreciation for opportunities to save enabled by company sponsored plans:


Most DC account–owning individuals agreed that employer-sponsored retirement accounts helped them “think about the long term, not just my current needs” (90 percent), and that “payroll deduction makes it easier for me to save” (91 percent). 

Saving in employer-sponsored retirement plans has certain tax advantages. Typically, neither the initial contribution nor Investment returns are included in taxable income. Instead, taxes are deferred until the individual withdraws money from the account. Overall, 85 percent of individuals with DC plan accounts agreed that the “tax treatment of my retirement plan is a big incentive to contribute.”

In addition, 85 percent of DC account–owning individuals agreed that their plans offer “a good lineup of investment options.” Seventy-nine percent agreed that “knowing that I’m saving from every paycheck makes me less worried about the short-term performance of my investments.”

Auto-Portability Is Essential 

Auto-portability has become increasingly important in the 401k arena, ensuring that  workers continuously benefit from company sponsored retirement plans, even as they shift jobs. As Spencer Williams, CEO of the Portability Services Network points out, the time to take  auto-portability more seriously is upon us: 

It goes without saying that the idea of people staying with a single employer for their entire working lives, and receiving an engraved gold watch and a pension upon retirement, is out of date. According to the U.S. Bureau of Labor Statistics (BLS), the youngest Baby Boomers, born between 1957 and 1964, held 12.7 jobs on average from ages 18 to 56. Furthermore, the BLS found that, in January 2022, the median number of years that paid employees had been with their present employer was 4.1 years.

When workers change jobs and cash out retirement savings, or lose track of their accounts, obviously the dollars available for retirement are reduced. Meanwhile, missing participants pose serious fiduciary liabilities for plan sponsors. Not surprising, leadership at the Employee Benefits Security Administration, has been stepping up emphasis on automatic portability

Plan Sponsor Protection Is Also Critical

As plan sponsors continue addressing  employee benefit expectations and complying with emerging regulations under the high standards of ERISA, updating protection is a best practice. Remember, an ERISA Bond, though required by the Department of Labor is not the same as having liability insurance as a plan fiduciary.

Shield your personal and business assets with affordable Fiduciary Liability Insurance from Colonial Surety Company, where a one-year policy, inclusive of 50k Cyber Liability Insurance, costs less than an hour of ERISA defense attorney fees in the event of a mishap. Colonial Surety’s affordable Fiduciary & Cyber Liability Insurance packages are specifically designed to help plan sponsors with:



  • DOL Compliance: The Department of Labor stresses the importance of Cyber Liability Insurance, considering its absence as a fiduciary breach. Our coverage not only safeguards the plan but also protects your business.




  • Comprehensive Protection: All our packages include Fiduciary Liability Insurance, ensuring your business and personal assets are shielded from the repercussions of fiduciary breaches. If you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000.




  • Cost-Control: Our packages are available for 1, 2, and 3-year terms, providing flexibility and locked-in rates.



If you already have an ERISA bond package with Colonial, you can even lock in your rates by upgrading to the 2 or 3 year package.

Protect yourself, your business and your plan for the go forward:

ERISA Bond+Fiduciary+Cyber Liability HERE

Providing customers with knowledgeable and friendly service since 1930, Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.