Whose Responsibility Is a 401(K) Plan?

Executives think employees should take responsibility for their own nest eggs.


Atlas, of Greek mythology fame, is often depicted in art supporting on his shoulders a globe representing the weight of the heavens. When you have a 401(k) and not a traditional pension, retirees must bear their own nest eggs, carrying them from job to job, nurturing them with additional contributions, and taking on the responsibility of selecting investments. Of course, sometimes employers offer a little support.

A recent online survey of 208 senior finance executives at companies with $100 million or more in revenue by CFO Research Services and Charles Schwab asked, "How would you characterize the respective roles of your company and the employee in the following areas of retirement and financial planning?" The responses:

  Employee's responsibility Company's responsibility Shared
Understanding individual debt management 87 2 9
Reallocating assets in 401(k) plan 85 5 10
Choosing the right investments in an individual's 401(k) plan 79 5 15
Regularly increasing deferral [savings] rates into 401(k) plan 72 8 20
Education about investment planning outside of the 401(k) plan 65 11 24
Reviewing performance of investments in 401(k) plan 34 38 29
Enrolling in 401(k) plan 30 21 49
Education about 401(k) rollover options 15 54 31
Education about features, restrictions, and benefits in 401(k) plan 7 70 24
Education about 401(k) plan costs and fees 5 71 24

Many survey respondents appear to be following Ayn Rand's famous literary advice and shrugging off the burden of nest eggs onto the people they belong to. The executives largely indicated that employees are responsible for managing their own accounts, increasing savings, and handling personal finance issues outside the 401(k) plan. However, many executives also assert that the company educates employees about the features, benefits, costs, and rollover options of its plan, the survey found. A large portion of respondents also say that the employer and employee share responsibility for enrolling workers in the 401(k) plan.

Tell us, how much help should employers offer with retirement saving and planning?