Navigating the Complexities of Retirement Plan Management
The management of retirement plans involves a myriad of complexities that demand careful attention and understanding. From navigating the roles of diverse service providers and record keepers to deciphering intricate fee structures, plan administrators face a dynamic and multifaceted landscape. These complexities arise due to the diverse range of responsibilities associated with retirement plans, including regulatory compliance, investment management, employee engagement, and fiduciary oversight. Successfully managing these intricacies requires a combination of industry knowledge, effective communication with stakeholders, and the utilization of resources that provide clarity and guidance. As the retirement landscape continues to evolve, the ability to navigate these inherent complexities remains a pivotal factor in ensuring the long-term success of retirement plans and the financial security of plan participants.
At the conclusion of The Plan Sponsor University (TPSU) Fiduciary Education Program held on the UCLA campus, Fred Barstein, founder and CEO of TPSU, engaged with Mike, a principal at a CPA firm in Southern California. Mike shared insights into the challenges he faces as a plan administrator. He emphasized his uncertainty regarding the roles of various providers, including record keepers and TPAs, which poses difficulties as he seeks to limit fiduciary liability. Mike also highlighted his struggle to comprehend the intricate fee structures associated with the plan, despite his financial expertise. He expressed uncertainty about who covers the fees of the financial advisor who plays a crucial role in employee education.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein, founder and CEO of TPSU here on the UCLA campus where we just completed a TPSU program, and I am here with Mike. Welcome, Mike.
Michael:
Hi, Fred. Nice to talk to you.
Fred Barstein:
Okay if we ask you a few questions?
Michael:
Go right ahead.
Fred Barstein:
Very good. Before we do, a little bit about yourself and your role at the company.
Michael:
Well, I’m a principal at a five person CPA firm in Southern California.
Fred Barstein:
Okay. So one of the things you talked about today Mike was how you’re not sure of the roles of the different providers, record keeper, TPA, and you’re not even sure what to call some of these other companies. Tell us about that and what issues that raises for you.
Michael:
Well as a fiduciary I want to limit my liability.
Fred Barstein:
Yes.
Michael:
And I’ve hired these other companies to absorb some of those duties. One, to do the form 5500 that we have to do annually, the notifications to employees, the annual reports that have to be done.
Fred Barstein:
Right.
Michael:
I’m busy being a CPA and I don’t really have time to spend a lot of time on fiduciary services.
Fred Barstein:
So you’re not sure who to call and who’s supposed to be doing what?
Michael:
Well, normally I’ll call the administrative firm and let them tell me whether I have to talk to our investment advisor or somebody else, and that’s been very helpful because they always give me the right answer.
Fred Barstein:
Right, so you call one, but it’d be helpful if you knew exactly what roles they played, and it’s a big confusion for people on that.
Michael:
Yes, I do agree with that.
Fred Barstein:
Good. And then one of the other things you talked about was fees, not knowing, and you’re a CPA, can you figure out the fees that you pay on your plan?
Michael:
I know we pay fees through having our target date funds, and that’s what pays the bookkeeping fees.
Fred Barstein:
Right.
Michael:
I pay fees to two different administrative firms.
Fred Barstein:
Directly?
Michael:
Yes. But I’m not sure who pays the financial advisor because I don’t pay him directly.
Fred Barstein:
Right. He’s not doing it for free.
Michael:
And he’s not doing it for free because he actually gives us a very good training when we have a new employee, the introduction to the plan, why they should invest, and that’s been effective because we’ve got a hundred percent participation in our plan.
Fred Barstein:
But you’re not sure what you pay him.
Michael:
But I’m not sure who pays them. I know I don’t pay them directly. That’s correct.
Fred Barstein:
Right, right, right. That could be a problem on it. Oh, good. Well, thank you for your time today and for attending. Anything you picked up today at the TPSU program you want to share with us?
Michael:
Yes. I have a problem with why I can’t eliminate past employees from the plan with over $5,000, but I got a good suggestion today that we could probably amend the plan to charge the fees directly to the retired employees who may be working for another firm, not really being retired. They just kept their 401K money with us.
Fred Barstein:
Sure. Right. That is a good suggestion.
Michael:
Yeah, so that was very helpful.
Fred Barstein:
Great. Well good. Well, thanks for your time today. Thanks for attending, Mike.
Michael:
Well, thanks Fred. Thanks for inviting me.
Fred Barstein:
Yes, and please come back again and thank you for watching 401KTV. Please stay tuned.
