The Benefit of Naming Benefit Plans

When managing multiple benefit plans, whether they are retirement or health-related, clarity is crucial. One effective way to achieve this is by giving each plan a distinct and descriptive name. Naming your benefit plans may seem like a small detail, but it can have significant impacts on communication, organization, and overall plan management.

Clear and specific names help differentiate between plans, reducing confusion for both plan administrators and participants. For instance, if your company offers several retirement options—like a 401(k), a 403(b), or a pension plan—giving each one a unique name that reflects its features or target audience can make these options easier to understand. Employees can quickly identify which plan is right for them, based on the plan name alone, leading to more informed decisions and fewer misunderstandings [3].

For health plans, the same principles apply. Whether you offer an HMO, PPO, or a high-deductible health plan (HDHP), assigning clear and meaningful names helps employees grasp what each plan entails [5]. A well-chosen name can signal the plan's benefits, like "Premier PPO" for a plan with extensive network coverage or "Saver HDHP" for a cost-effective, high-deductible option. These names not only assist in day-to-day administration but also contribute to effective communication during open enrollment or when discussing benefits with employees.

Moreover, names serve an essential role in documentation and compliance. A distinct name helps you and your team organize records, making it easier to track plan performance, handle audits, and ensure compliance with regulations. When each plan has its own identity, the chances of mixing up documents or records diminish, leading to more efficient and accurate management [5].

In addition, a good name can reflect your company’s culture and values, reinforcing the connection between your benefits offerings and your overall mission. For example, naming a retirement plan after a core company value or a founder can imbue it with a sense of purpose, making it more relatable and memorable for employees [4].

While naming your plans isn’t a requirement, it’s a best practice that can simplify management and enhance employee engagement. When selecting names, keep them straightforward, relevant, and easy to remember. Avoid overly complex or similar-sounding names that could cause confusion. Also, consider consistency across plan types; a unified naming strategy can further clarify the distinctions between different benefits and aid in communication [3].

In conclusion, naming your retirement and health benefit plans is a small but strategic step that can improve clarity, streamline administration, and strengthen communication. By choosing thoughtful and distinct names, you create an environment where both you and your employees can easily navigate the benefits landscape, ensuring that everyone gets the most out of what your company offers.

For support in managing your fiduciary responsibilities, visit Fiduciary In A Box.  

© 2024 Fiduciary In A Box, Inc. All rights reserved

References

[1] Investopedia. (n.d.). Naming a trust as beneficiary of a retirement account: Pros and cons. Retrieved from https://www.investopedia.com/ask/answers/09/trust-beneficiaries.asp 

[2] American Bar Association. (n.d.). Planning with retirement benefits. Retrieved from https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/planning-retirement-benefits/ 

[3] NASRA. (n.d.). Plan design. Retrieved from https://www.nasra.org/plandesign 

[5] U.S. Department of Labor. (n.d.). What you should know about your retirement plan. Retrieved from https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/publications/what-you-should-know-about-your-retirement-plan.pdf 

[4] Virginia Retirement System. (n.d.). Naming a beneficiary. Retrieved from https://www.varetire.org/retiree-milestones/naming-a-beneficiary/