A few weeks ago, reporter Rebecca Lake from U.S. News & World Report wrote an article titled “How to revive your 401(k) in your 50s,” providing readers with tips on how they can breathe life into this retirement savings vehicle. I shared some of my insight with Rebecca, but wanted…
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Category: 401(k)
Critical questions for plan sponsors: Is your plan 404(c) compliant?
Section 404(c) provides some protection for plan fiduciaries related to the investment decisions that individuals make in participant directed retirement plans. For plans that are completely participant directed, by complying with the rules of 404(c), plan sponsors are relieved of some liability for what may be seen as poor investment…
Critical questions for plan sponsors: Have plan documents been read and understood by plan fiduciaries?
The plan documents are the governing documents that describe how a plan should operate. It’s important for plan fiduciaries to read all documents so they understand what they can and cannot do as well as what they’re required to do. If the documents aren’t read, it would prove difficult to…
Critical questions for plan sponsors: Are employees receiving advice specific to their situation?
A recent study by the International Foundation of Employee Benefit Plans shows that by instituting a financial education and advice campaign, 42 percent of employees have a better understanding of the benefit, allowing them to make the most of it and become more satisfied and productive employees. Education can also…
Critical questions for plan sponsors: Do you have written record of the plan minutes and documents?
Written records of retirement plan minutes and documents are essential because if something is not in the file, then technically it didn’t happen. So, if the IRS or the Department of Labor comes knocking at a business and asks about the plan, or why the retirement plan committee has made…
Critical questions for plan sponsors: Who is a fiduciary?
In addition to knowing who the plan fiduciaries are, it’s important to recognize if you are a fiduciary. So, who can be a fiduciary? A fiduciary could be a business owner sponsoring a retirement plan, the named trustee of the plan, and/or retirement plan committee members, which we’ve previously noted.…
Critical questions for plan sponsors: Do you have a written investment policy statement?
An investment policy statement (IPS) is the governing document that provides directional and procedural guidelines for the inclusion or removal of any investment in either a retirement plan or endowment. Though not required by law, it is highly advisable as it provides a clear roadmap to the plan fiduciaries for…
Critical questions for plan sponsors: Do you understand all the fees that you are paying?
As a plan sponsor, it’s your fiduciary duty to understand the fees associated with your plan and if they are reasonable. This is one of the largest areas where breach of fiduciary duty lawsuits originate. There’s several levels of fees. An understanding of how service providers, record keepers and/or custodians…
Critical questions for plan sponsors: Do you have fiduciary insurance coverage?
Fiduciary insurance covers fiduciaries to an employer-sponsored retirement plan in the event they are charged with breach of fiduciary duty. It protects and pays the legal liability from claims for alleged failure to act prudently with regards to a retirement plan. Unlike a fidelity bond, that protects business owners from…
Critical questions for plan sponsors: Is your advisor serving as a plan fiduciary?
In order to know if your financial advisor is serving as a fiduciary and acknowledging such in writing, you’ll first need to understand what a fiduciary is. According to Dictionary.com, a fiduciary is, “a person to whom property of power is entrusted to the benefit of another.” For a company…
