The Do Nothing 401k Plan

What if your company’s retirement plan never required your employees to do anything!  Would this be a good way to run your plan?  How would it work? Consider this:

Your new 25 year old employee starts and on his/her first day of employment he is automatically enrolled at 6% and receives the company match of 3%.  The beneficiaries use standard defaults and the investments are defaulted as well to very low-cost target date funds.

Each year, with auto escalation, the contributions increase by 1%.  When your employee reaches age 35, the contributions cap at 15%.  They stay at 15% until they hit the IRS maximum or until the employee retires at age 67, whichever comes first.

Along the way, this employee never looks at statements.  They never change their contribution amount; never borrow or withdraw their money, and never have a question about their account. The contributions keep coming in – year after year. They spend their time budgeting, controlling their expenses, managing their health, and enjoying their life and their family.   They concentrate on the things they can control and don’t worry about the things they can’t.

Could you really have a retirement plan like this?  What would become of this employee (assuming they won’t go crazy working for the same company for 42 years)? Wouldn’t you be concerned that, without the help of the experts in the financial services industry, they would end up far short for retirement?

An employer would never do this because, ya know, you just can’t.  It wouldn’t be prudent, would it?  You have to hire experts to monitor your plan and make sure of whatever you need to make sure of.

And to be sure, no person would behave this way and I am not advocating for it. In fact, our business is based upon the notion that the value we provide in the form of guidance to organizations and individuals on their retirement plans will produce a better outcome for the plan participants.

But the financial services industry is simply filled with too much nonsense and jargon that passes for professional assistance.  Much of this guidance comes at a steep price – which acts as a drag on the earnings of plan participants.  It is an unnecessary transfer of wealth from people trying to save and plan for their future to the careers of those in the industry.

I am confident that this simple, do nothing approach would, in most cases, produce a better outcome than relying on an industry that spends millions on investments that try to beat the markets, more millions providing consulting services evaluating these investments, and even more millions on marketing dollars to promote these investments and consulting services.


Gravie: An Alternative to Group-Based Health Insurance


I recently came across a young Minneapolis-based firm that my caught attention.  My wife works at a small non-profit and she is evaluating their group-based health plan.  In her evaluations, she reached out to Gravie.  As I learned more about how much they could help her organization, I was excited about how they could help our Family set-up our health care plan.

I also became more interested in how they are poised to help small to mid-sized employers – the kind of clients that we work with as well.  I think they are an interesting story and represent an exciting development in how employers can shop for and improve their health care insurance benefit for their staff while providing quality, personal service to the employees.  Andy Minnich, who works in sales at Gravie, agreed to share more about the Gravie story.

Thanks for your time, Andy.  We really appreciate it. 

Can you briefly describe what Gravie does?

Gravie helps businesses move their employees from traditional group-based health insurance to individual plans. We help employees shop for, buy and manage their plans, apply for government tax credits and use money from their employer to pay for health insurance.

How long has Gravie been in business?

Gravie launched in November 2013 at the beginning of the 2013 open enrollment season.

Can you characterize what would be a good candidate client for Gravie?

Gravie is a no-brainer for nearly every company with less than 50 employees, and often makes sense for companies with less than 100 employees. We also work with companies that have more than 100 employees. Gravie works across all industries.

What do you help your clients accomplish?

Gravie helps employers save money (typically 20-40%), eliminate the hassle of a group plan (paperwork, compliance issues, general headaches), and provide employees a much better healthcare experience (year-round help is available for free to all Gravie members — it’s like having a personal concierge for health insurance).

Describe what one of your client’s employees’ experience might be when they work with Gravie.

  1. Employees are introduced to Gravie through a kick off meeting led by Gravie’s account management team. Employees learn who Gravie is, what they need to do to pick a plan, and how Gravie can help them throughout the year.
  2. Gravie sends communications and reminders to employees to encourage them to pick a plan before the deadline.
  3. An employee can shop entirely online using our plan comparison tools and recommendations or they can call a Gravie advisor and shop with assistance over the phone.
  4. Once an employee picks a plan, a Gravie advisor submits the employee’s application and gets any outstanding information to the health insurance company.
  5. Once an employee is enrolled, they can contact a Gravie advisor at any time of the year for help managing their insurance. We can help with questions like, “Why was my claim denied?” “Is my doctor covered?” “How much with this prescription cost?”

What are the specific benefits to your clients’ employees of working with Gravie?

  • Save Money: on average, employers save about 20-40% over traditional group plans when they work with Gravie.
  • Eliminate Hassle: we help your employees with healthcare, so you don’t have to. No more annual renewals, open enrollment meetings, endless rate increases and dealing with insurance companies. We’ll also take care of getting the money you provide your employees to them.
  • Better Experience: instead of offering 1-3 plan options, you can give your employees access to hundreds of different plans to choose from. Plus, we’ll help your employees with any health insurance-related questions they have, at any time of the year.

Can Gravie currently work with any employer in the country?  If not, what are your limitations?

Yes, we can work in all 50 states. However, employees will only receive the full web experience if they live in Minnesota, Indiana or Florida. We are expanding to additional states in early 2015.

If an employee lives outside of these three states, we will do plan research for them based on their wants and needs. Then we’ll deliver a few plan options for them to choose from.

How can an employer contact you and how would you suggest that a prospective employer evaluate Gravie?

You can contact Gravie by emailing, calling 612-355-1590 ext: 3 or filling out this form.

After contacting us, we’ll gather some information about your current group plan and complete a financial analysis to calculate the cost savings of switching to Gravie.

Editor’s note:  This is not an endorsement.  We have no business relationship with Gravie and do not receive any compensation from Gravie.  We are just interested in what they do and how it may help smaller employers!

One Small Company in St Paul MN – One Great 401k Plan for America

Does a small company in St Paul MN have a retirement plan that is so good that it’s significance is worth comparing to the first moon landing?  That’s probably a stretch, but their plan is a great model for other employers, both large and small, to emulate.  It is likely one of the best plans in America.

John Kingrey is the recently retired Executive Director of the Minnesota County Attorney’s Association (MCAA) and responsible for implementing the new plan before he left.  MCAA has just 5 employees and uses a simple 401k matching plan.  With the new plan, the employees’ average cost is .15% per account.  The industry average for small plans is around 1.30 to 1.40%.  As you can see, the plan is very inexpensive for the employees.  And with just 5 people, the MCAA plan is far smaller than what is even considered a small plan.  John agreed to answer a few questions about their new plan.

Thanks for your time John.  You just recently retired as the Executive Director of a trade association in St Paul MN.  Can you tell us a little about the organization you retired from?

The professional trade association was a membership organization which provided training, public policy development, and advocacy for it’s members. It had a budget of approximately $750,000 funded through dues, product sales, and grants.

One of the things that you were able to implement prior to your departure was a change in your arrangement for your retirement plan.  Prior to the change, how long were you with your current provider?

We were with another provider for approximately 13 years. It was a provider that I recommended due to the positive experience with my previous employer.

How aware were you and/or your staff of the overall fee structure of your plan?

We did not appreciate and had only limited knowledge of the fees associated with our previous plan. When we reviewed how those costs could be reduced, it made sense to restructure our plan.

When you started to learn more about your plan and your options were you surprised at how much you could reduce the cost of your plan?

The staff was very surprised that the fees and administrative costs could be reduced by more than 50%. They were involved in the decision to switch plans.

As a trade association, how did your Board of Directors respond to the idea of changing to a new arrangement?

Since the Simple 401k funding was capped, the Board supported the move to a new plan as a sensible way to provide an additional benefit to employees through reduced fees.

In your situation, the trade association decided that it would pay for some of the costs of plan support such as record keeping and advisory guidance.  Why did you do that?

The Board supported my recommendation to pay for some of the costs of plan support as a way to provide an additional benefit for our employees. Otherwise, those costs – albeit small – would have been picked up by the employees. Since our Simple 401k was capped, this was a reasonable way to provide an additional benefit to our staff.

With your new plan, your employees only pay the costs of the funds and then can also pay a small fee if they want personal planning assistance as well, is that correct?

The employees pay a small fee for personal planning. I was very impressed with the clear, straightforward information provided through the plan’s website at no cost. My only regret is that we didn’t make the move sooner.

Thanks John.  MCAA’s new plan is a nice legacy for the employees.  Congratulations!

You can contact John directly at with questions.