Fiduciary – New Compilation Helps Clarify Plan Sponsors’ Roles

Fiduciary - Clarify Plan Sponsors' Roles

A recent Alliance Bernstein (AB) study found that nearly half (49%) of plan sponsors don’t consider themselves a fiduciary. However, under the Employee Retirement Income Security Act (ERISA), if you’re an employer sponsor of a retirement plan, guess what — you’re a fiduciary.

If you’re in the dark about your fiduciary duties, fear not. A new compilation of blog posts released by New York-based Cohen & Buckmann, P.C., a law firm that specializes in executive compensation, pensions and benefits law, can help enlighten plan sponsors about their roles and responsibilities as retirement plan fiduciaries. The guide is called “The Intelligent Fiduciary Series,” and it is an all-new-for-2018 version of the series the firm released last year. It offers 18 posts on varied topics, including how to protect 401(k) plan data from being hacked, how to identify gaps in your plan’s Investment Policy Statement (IPS), determining when to call outside counsel, and one of our personal favorites, titled “Getting Through the 5500 Season Without Xanax.”

In the post, Buckmann offers sponsors proactive tips to take the stress out of filing your Form 5500. She recommends filling out your questionnaires early to ensure they are correct, and to give yourself time to verify data, such as whether or not you have a fidelity bond (hint: Buckmann writes “you won’t want to answer ‘no’ to that one; just get the bond.”). She also advises double-checking every line of your vendor’s draft Form 5500 if you delegate that function to an outside provider, and make sure you get clarification if any of their responses look out of whack. Finally, she reminds sponsors to be as prepared as you possibly can be for plan audits, and of course, cooperate with the auditor to get the audit completed on time.

In another post on identifying gaps in your investment policy statement (IPS), Buckmann states that if your IPS is missing some important items, it’s not too late to fix them. Of course, she advises being proactive about closing any gaps in your plan’s IPS. In addition, she offers “red flags” to look out for, such as an IPS:

  • that’s designed to protect your advisor or vendor (the IPS should protect the sponsor’s internal fiduciaries),
  • that doesn’t have a section on fee review (let’s just say you’d better be regularly reviewing and benchmarking plan fees and doing RFPs),
  • that doesn’t discuss qualified default investment alternatives (QDIAs) or target date fund (TDF) review (your IPS should have a separate, comprehensive section that discusses QDIA selection and review, including an analysis of alternatives to target date funds, even if they’re your plan’s QDIA, and standards for selecting and monitoring your QDIA),
  • that locks you into decisions (your IPS should allow for flexibility in decision-making, and for fiduciaries to adapt to changes in regulations, fund managers, etc.)

Buckmann’s writing style is irreverent, accessible and always insightful. Dare we say she makes learning about your fiduciary responsibilities fun? To download your copy of the 2018 version of “The Intelligent Fiduciary Series,” click here. And be sure to check out Carol Buckmann’s popular monthly “Ask a Lawyer” column here on 401kTV.

See More about Carol Buckmann here.


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