Your employees will be aware of how much they are paying for the retirement plan you offer. Your responsibility is to verify that the costs are reasonable and justified. The end result is a better retirement plan for yourself and your employees.
Recent articles addressing the U.S. Department of Labor’s (DOL) fee disclosure regulations taking effect in 2012 under the Employee Retirement Income Security Act‘s (ERISA) section 408(b)(2), for fee disclosures from service providers to plan sponsors, and section 404(a)(5), for participant-level fee disclosures, have largely emphasized the impact these rules will have on retirement plan vendors—how they must structure their fees, how and what types of disclosures they will provide, and how their accountability will be altered.Retirement plan sponsors, however, will also experience a sea change in their fiduciary role and responsibilities. The DOL rules will impact plan sponsors equally, if not more, than their service providers and will require an overhaul of the plan sponsor’s approach to many formerly rote fiduciary activities.
The emphasis made in commentaries by vendors’ associations on the implications of the rules for their members has inadvertently diminished the focus on plan sponsors’ new duties under these regulations. Plan sponsors, for example, will have a responsibility to examine and audit the adequacy of their vendors’ fees. The government’s use of the word “disclosure” as the keyword in the rules serves to disguise the urgency that the rules dictate for plan sponsors and their roles.
Plan sponsors now have a responsibility
to examine and audit the adequacy
of their vendors’ fees.
As a plan sponsor your fiduciary responsibilities have increased with the new DOL regulations. The end result will be a better plan for your employees.
Please comment or call to discuss how this affects you and your company retirement plan.
- Who Are Your Fiduciaries? (401kplanadvisors.com)
- Retirement Plan Sponsors’ 401(k) Perceptions vs. Reality (401kplanadvisors.com)
- Study: Number of Workers Financially Unprepared for Retirement at Crisis Level (401kplanadvisors.com)