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31 Dec

Finding “Best Fit” in a Retirement Plan Provider Through the RFP Process

Much has been written about what plan sponsors should include in a Request for Proposal (RFP) when they embark upon a search to hire or replace a retirement plan provider. But written proposals submitted in response to an RFP will never capture all of the essential elements that plan sponsors should assess in selecting a provider. It is therefore vital that plan sponsors recognize the potentially significant limitations of relying too heavily upon the RFP as a decision tool. No one in their right mind would buy a house on the internet; yet this is essentially what many plan sponsors are doing when they select a plan provider on the basis of data that has been dumped into a spreadsheet.

When plan sponsors begin an RFP process, it is commonly recommended that they utilize an RFP template and send out multiple RFP’s to several potential providers. This traditional RFP approach is extremely common and remains a fact of life in the retirement plan business. However, there are far more efficient ways to find and select providers. To the extent an industry standard exists, the ‘SPARK’ (Society of Professional Administrators and Recordkeepers) RFP is the most commonly utilized template. The SPARK RFP is thorough, but it is overly cumbersome. It focuses too heavily on the technical aspects, many of which are “commoditized” by noteworthy providers. It also neglects several critically important components of finding the right provider for your organization.
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11 Aug

Survey Finds Gen Y in Trouble Financially

Many of the more than 87 million Americans age 18-34, popularly known as “Gen Y” are in financial trouble, according to survey results just released by Western Union.

The latest Western Union Money Mindset Index, a national survey of 3,000 consumers, finds nearly 30% of Gen Yers report having difficulty in managing their spending, more than 20% wait longer to pay their bills, and 35% have borrowed money from friends or family members.
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11 Aug

401(k) Day 2010 is about ‘Taking You There’

The Profit Sharing/401k Council of America (PSCA) has unveiled its 2010 401(k) Day campaign with the theme of “401(k) Day… Taking You There.”

A news release said 401(k) Day is an annual comprehensive communication and education strategy campaign designed to help sponsors educate their plan participants about the many advantages of participating in an employer-sponsored defined contribution plan. Officially, PSCA said this year’s 401(k) day falls on September 10, but plan sponsors “are encouraged to celebrate any day of the year that works best for their employees.”
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11 Aug

‘Wrong’ Headed? 10 things you’re probably STILL doing wrong as a plan fiduciary

In this as, perhaps, many professional endeavors, it seems that the more you know, the more you know you don’t know. Moreover, the standards imposed on plan fiduciaries by the Employee Retirement Income Security Act (ERISA) are not only demanding, they may be the highest found in law—and with personal liability imposed, to boot.

About a year ago, I compiled a list of “10 things you’re (probably) doing wrong as a plan fiduciary.” By all accounts, it was well-read, much forwarded, and useful in terms of helping plan sponsors and retirement plan advisers highlight areas of possible improvement with your plan sponsor clients.
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08 Jul

4 Liability Reducing Strategies for Today’s 401k Plan Sponsor (Part II)

By Chris Carosa | June 21, 2010

(The following is the second of two parts summarizing a keynote speech given by the author to a focus group on fiduciary concerns in Buffalo, New York on June 9, 2010.)

Last week we outlined the following regulatory issues 401k plan sponsors need to know right now: 1) The 401k Investment Advice Rule; 2) A Universal Fiduciary Standard; and, 3) The Modification of 12b-1 Fees (Will 401k World Change by Fall? FiduciaryNews.com June 15, 2010). These three issues linger like a ticking time bomb. They’re out there. They’re going to go off at some point. We just don’t know when. Plan fiduciaries need to get ready for them. Many 401k plan sponsors appear to have taken an “ostrich” approach. Unfortunately, ignorance is no excuse for the law. Plan sponsors need to know what’s going on, lest they risk a troubling surprise. These are serious issues and the astute fiduciary can prevent unanticipated future liabilities by taking action right now.
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08 Jul

Will 401k World Change by Fall? 3 Pressing Regulatory Issues 401k Plan Sponsors Need to Know Right Now (Part I of II)

By Chris Carosa | June 15, 2010

They say things happen in threes. By the time the leaves begin to fall, this adage may prove true for 401k plan sponsors (and any ERISA fiduciary for that matter). Since the start of the year, the Department of Labor (DOL) and the Securities Exchange Commission (SEC) have worked diligently on developing a fresh regulatory framework. These potential new rules may dramatically change how 401k plan sponsors manage their companies’ retirement plans. Failure to understand the implication of these changes can ensnare companies and their ERISA trustees with unexpected liability issues.
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08 Jul

The Government wants Your 401(k) and Retirement Account

By Scottsbluff : NE : USA | Jul 07, 2010

Hang onto your Individual Retirement Accounts, and 401(k) plans because the Federal Government wants them. According to an article by Goldworth, Deputy Assistant Treasury Secretary Mark Iwry, and Assistant Labor Secretary Phyllis Borzi head an endeavor to have Americans convert their retirement accounts. The Government wants them converted into annuities and Treasury bills, to fund the national debt. They need to sell $2 trillion dollars of bonds, and foreign countries aren’t buying like before. The world is concerned about the growing debt of the United States.
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23 Jun

Is the Fiduciary Standard Enough? 3 Critical Fiduciary Duties Every ERISA Plan Sponsor Must Know

Congress, regulators and the financial industry itself sit on the cusp of requiring all financial service providers who provide investment advice to adopt the fiduciary standard. Now is a great time for ERISA Plan Sponsors (as well as those who provide investment advice to ERISA plans or participants), to familiarize themselves with the nature of fiduciary duties. The anticipated change in the law may expose these officers and vendors to a fiduciary liability they might not have anticipated.
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23 Jun

Court Keeps 404(c) Shield in Place for Trustee

A retirement plan trustee was protected by Employee Retirement Income Security Act’s (ERISA) 404(c) safe harbor shield against a lawsuit by two 401(k) participants in connection with wrongdoing charges against the plan’s investment adviser.

The plaintiffs filed the suit after finding out that their accounts had been hit with a significant asset loss because of the activities of the adviser, whom both had appointed to manage their accounts.

The court noted that plaintiffs David Tullis and Michael Mack were two physicians who maintained pension funds through the Toledo Clinic Employees’ 401(k) Profit Sharing Plan, and that in the early 1990s, they chose William Davis of Continental Capital Corporation as their investment adviser.
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23 Jun

House Passes Fee Disclosure and Pension Funding Relief Bill

The U.S. House of Representatives passed a bill Friday that provides for defined contribution plan fee disclosure and temporarily eases pension funding requirements.

The American Jobs and Closing Tax Loopholes Act (H.R. 4213) was considered by the House this week, after passing the Senate (see “Fee Disclosure Rides Along with Pension Relief”).
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