Burden or Bundle: Service Providers and Your 401(k) Plan

Awell-executed 401(k) plan provides many advantages for employees, business owners, and the overall operation of a business.

The basic services of a 401(k) plan are recordkeeping, administration, trustee, and investment. Every plan needs these services to function and to stay in compliance with the Department of Labor, Internal Revenue Service, and the plan’s own provisions. What you may not understand are the different ways these services can be delivered. Let’s take a look at them.

Unbundled – Multiple independent providers are brought together. Associated costs may be higher because each provider charges its full fee. Communicating with many service providers, as well as unclear service expectations, increases the time an employer spends on administration.

Unbundled may work well for large employers with a dedicated human resources benefits team, but may be a burden for smaller employers.

Bundled – One single provider for all services. Easier employer administration because of just one contact. Recordkeeping and administration costs might be slightly lower because the provider is able to offset these costs with higher investment management fees associated with its own proprietary investment funds. Bundled providers are often large, impersonal financial institutions.

Alliance – Alliance providers combine the best features of both the bundled and unbundled models. The employer has the convenience of one contact, the alliance leader, that brings together one or more providers. With more cost savings and higher-quality service, the alliance approach is the fastestgrowing delivery method among all plans.

Heartland Trust Company is the alliance leader! We keep many services in house and have aligned with an industryleading investment platform and recordkeeping service to provide the best retirement services for your business.

As North Dakota’s oldest independent trust company, Heartland Trust has been providing customized 401(k) service and wealth management for more than 23 years.

Contact Brian Halverson and Heartland Trust Company to reduce the time you spend administering your 401(k) plan and get back to improving your bottom line!

*Understanding 401(k) Service Delivery Models, www.401khelpcenter.com