Will you survive a retirement plan audit?
How about an employee lawsuit?
You know your business inside and out. But do you know everything there is to know about maintaining your 401(k) plan?
Did you know that a plan fiduciary (YOU, perhaps?) can be held personally liable for a breach of fiduciary responsibility, which may include the plan’s investment choices?
Complying with ERISA requirements can be overwhelming. And even if you have the time to do it, are you sure you have the critical information you’ll need?
It’s essential that your 401(k) vendor and advisor pay attention to fiduciary duties as they affect you as a plan sponsor.
“So what do I look for?” you ask. Here is a handy list for potential improvements:
Replacing underperforming or inappropriate investment options – funds that have underperformed their benchmark and peer group, have style drift issues, or are inappropriate from a risk-adjusted return standpoint must be scrutinized.
Excessive fees at the participant level – are you sure that the fees being imposed on your participants are reasonable? Are more competitively priced, institutional funds being offered or just retail options?
Documentation and due diligence files – a sample Investment Policy Statement and 404(c) form are not enough. Are you being provided with comprehensive due diligence reports and communications that keep you up-to-date with the performance of your plan? Do you understand why your current funds are still in the lineup?
Investment Committee meetings – are you being provided with necessary information to effectively monitor your plan and hold regular investment committee meetings?
Participant direction and education – how are your participants diversifying their assets? Are an overwhelming number of options being presented without much direction? Are your participants being offered a comprehensive savings and advice solution?
Providing a true “select” list of investment options – many 401(k) vendors leave the burden of weeding through funds squarely on the shoulders of the plan sponsor.
The use of proprietary funds or other potential financial conflicts of interest – is your current 401(k) vendor utilizing an unbiased and independent investment selection and review process (or is there an incentive to push one fund over another)?
404(c) compliance – have you reviewed the steps that are required to fully comply with Section 404(c)?
Regular self-audits – have you done one?
Dealing with all the above issues goes a long way toward proving “procedural prudence”. The Department of Labor doesn’t expect you to have a crystal ball, but you ARE expected to act in the best interest of plan participants and make decisions like an expert (you’re an expert, right???).
“So what do I do now?” you ask – this is where we come in. As retirement plan consultants, we specialize in helping companies like you reduce their fiduciary liability and maximize the value of their 401(k) plan. We are looking for a few more great clients – call us to schedule a time to talk about your current plan and how we can help you find areas of concern and areas of improvement.