Due to ERISA’s increased standard of care, the now defunct DOL rule and other potential regulatory replacements, plan sponsors are faced with the heightened importance to understand the fiduciary roles and responsibilities for their retirement plan. Below, we have outlined the ways of becoming a fiduciary, the differences between ERISA 3(21) and 3(38), and which is best depending on your plan and plan committee(s).
Plan sponsors have to manage many moving parts in their retirement plans. Arranging plan options, managing compliance, increasing participation, educating participants and most importantly, adhering to fiduciary obligations can feel like an overwhelming responsibility. Due to the large amount of work in starting and maintaining their retirement plan, sponsors often overlook certain aspects that may expose them to potential liability. Additionally, some plan sponsors are unaware of the ongoing fiduciary duties which can result in misconceptions about the plan and its participants. These misconceptions can be costly, and sponsors may find themselves in trouble with the IRS or the Department of Labor.
Here are five common misconceptions plan sponsors have – and why they are likely wrong.
In April of this year, the Securities Exchange Commission (SEC) proposed a new set of guidelines to better govern relationships between professional financial advisers and broker-dealers and those of their individual clients. These suggestions, collectively dubbed Regulation Best Interest, could reshape the relationships between individual investors and the professionals who advise them by ensuring that a broader swath of those relationships requires the broker-dealer to act in the best interests of the client.
The healthy dynamism that has characterized the U.S. economy over the past decade has been a tailwind for businesses of all sizes. As with any period of change and expansion, however, there have been growing pains. Employee turnover has risen sharply in the past several years, and a tightening labor market looks set to exacerbate this trend for the foreseeable future. People have opportunities, and they’re increasingly willing to move to pursue them. The average baby boomer, to this point, has changed jobs 10 times since the start of his or her career. For millennials, that figure could approach 15 by the time retirement age rolls around. Read on to learn why plan sponsors should consider account consolidation.
Employer-based retirement plans are a major benefit to employees, especially in today’s job economy where 401(k) or 403(b) plans make up the majority of employee retirement savings. A 2018 survey from the Plan Sponsor Council of America found that 70 percent of companies retain an independent retirement plan advisor, which was 66.8% in the prior year. There are several factors that lead to this growth, such as overseeing the delivery of investment advice to participants by way of registered investment advisors (30.8 percent), certified financial planners (28.8 percent) or third-party web-based providers (20.2 percent). Let’s look at why companies hire plan advisors, why they should care, and tips to find the right advisor.