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Jan 27, 2010
“Obama-Save” (as opposed to Obama-Care)
On Monday, January 25, 2010, the White House released a fact sheet on their Middle-Class Task Force initiatives. The fact sheet has few details, but there is a great summary of the retirement-related initiatives here on PlanSponsor.com. I have a number of thoughts and concerns about these initiatives that I’ll outline below.
Let me just say up front: commission-based investment advisors and insurance product sellers (and maybe Mr. Biden’s Middle Class Taskforce) will NOT like my viewpoint … but that’s too bad! My company is about helping Plan Sponsors and their Participants do the right thing, the right way … period. Figure out how to line up with that philosophy and we won’t have a problem.
The shift in the benefits industry over the last several decades from pension plans to 401(k) plans and traditional indemnity medical plans to consumer-driven health plans has ushered in an era of “personal responsibility”. In “the old days” employers took responsibility for all of the decision making around benefits for their employees. The traditional pension plan said to the employee: “We’re handling it. Your pension will provide your retirement income, so you don’t have to worry about it. We’re making all the decisions for you and taking all of the risk.” The 401(k) plan, on the other hand, tells the employee (whether they understand it or not): “We’ll give you the vehicle, but you have to make all the decisions and take all the risks. If done right, it will provide for your retirement income; but success depends on the quality of the decisions YOU make. We’re not responsible for those decisions anymore.”
This has been a good shift for employers, resulting in less liability and less responsibility for the outcomes. But too often, I don’t think the employees “got the memo” about their personal responsibility. It’s like raising a child, and when they reach working age, we dump them into the world without the skills needed to succeed. You wouldn’t hire a chemical operator at a chemical plant with no experience, and just point them toward the reactor and say “there it is, now go run it.” You hire experience, or … you train them! You provide training internally on key internal processes that help your business succeed.
In the same way, if we want our employees to be responsible for their own retirement savings, we need to provide appropriate training for our employees to succeed at saving for retirement. This training should go way beyond just handing them an enrollment kit, a pile of fund prospectuses, and instructions for logging onto the plan’s website. But sadly that is often the extent of “training” provided to employees. If we truly want our employees to be responsible for their own retirement savings choices, and we want them to be successful at it, we will need to provide not only information about the plan itself, but also some training on what it all means and what it will take to reach their goals.
Posted by: 0 in vantageblog, retirement plan, retirement audits, qualified plan, Prudent expert, plan sponsor, plan compliance, partial plan termination, named fiduciary, IRS audit, Form 5500, fiduciary responsibility, fiduciary liability, ERISA audit, eligible participants, DOL audit, audited financial statements, 401(k) plan on
Nov 3, 2009
We’ve passed the extended filing deadline for 2008 Form 5500’s by a couple of weeks now. So you can check that task off of your list until next year. But I want to ask you a serious question …
Did you read it?!?
I mean did you really read it before filed it? Or were you cutting the filing deadline so close that when you got the final package in your hand you just put it in the mail to get it out the door? (Been there, done that ...)
When now President Obama was campaigning last fall, the picture for the 401(k) was even worse, with hints of “free” withdrawals, nationalized retirement programs, and other ideas to kill the 401(k). Now he just wants to “tweak” retirement savings with the intent of encouraging worker savings over spending, and … wait for it … thereby reducing the trade deficit … really?!?
Interestingly, the proposed changes are largely “administrative” (read “a mess for employer-sponsors and the industry") and don’t require Congressional approval. Does he just want to move quickly, or is he concerned that Congressional hearings on the matter would shed too much light on the unintended consequences of his changes? Just wondering …
Let’s take a look at what President Obama proposed Labor Day weekend and talk about what the impact of these changes mean to employee retirement savings, employer plan sponsors, and the retirement industry.
Posted by: 0 in retirement plan, retirement audits, qualified plan, Prudent expert, Plan Document, named fiduciary, fiduciary responsibility, fiduciary liability, ERISA audit, Due Diligence, 401(k) plan on
Oct 7, 2009
Under ERISA, a plan fiduciary is anyone who:
Exercises discretionary authority in the management of the plan
Gets paid for regularly providing investment advice
Exercises any discretionary authority in the administration of the plan
Fiduciaries in an organization typically include:
Posted by: 0 in vantageblog, retirement plan, retirement audits, qualified plan, Prudent expert, plan sponsor, plan expenses, Plan Document, plan compliance, fiduciary responsibility, fiduciary liability, Fee disclosure, Due Diligence, 401(k) plan on
Sep 30, 2009
Benchmark your plan! Benchmark your plan!
Make sure you’re not paying too much!
Make sure it’s competitive!
Make sure it’s compliant!
The pressure is on you as the Plan Sponsor to make sure the retirement plan you’re providing for your employees is the best it can be. You know you need to benchmark your plan, but you’re not sure HOW.
Here are a few options to consider:
Posted by: 0 in vantageblog, retirement audits, recordkeeper, qualified plan, plan sponsor, Plan Document, plan compliance, named fiduciary, IRS audit, fiduciary responsibility, fiduciary liability, Due Diligence, DOL audit on
Sep 15, 2009
How’s your Due Diligence file look? If the IRS or DOL came in tomorrow, would you have all of the documents related to your plan in one central location, and organized for easy retrieval? No? You need to make a project out of this and get organized!
All Plan Sponsors should maintain a central due diligence file to uphold your fiduciary responsibility. It also comes in handy at audit time – both annual ERISA audits and in the unfortunate event of an IRS or DOL audit.
So what is a Fiduciary Due Diligence File and what’s in it? A Fiduciary Due Diligence File is a central repository for all current documents associated with the Plan. It includes documentation of any actions taken on the Plan, current testing results, sample communications, committee minutes, investment fund prospectuses, and much more. We have a checklist on our site to help you get organized.
