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Fiduciary Training Guidelines Help Fiduciaries with IRS and DOL Audit Questions

Fiduciary Training Guidelines Help Fiduciaries with IRS and DOL Audit Questions

Failing to participate in a strong Fiduciary Training Program surfaces as the # 2 Mistake made by Plan Sponsors for 401k plans and 403b plans.  Colin Clark, Adjunct Lecturer for The Plan Sponsor University (TPSU) Fiduciary Training discusses with Ms. Jewel Lim Esposito, ERISA Attorney, the # 2 Mistake often occurring in 401k plans and 403b plans.  Frequently during a DOL audit, the plan sponsor is asked: “What Fiduciary Training Program have your plan fiduciaries attended?” Ms. Esposito points out the topics that a Fiduciary Training Program should address – such as, 403b and 401k vendor selection, 403b and 401k benchmarking, 401k monitoring fees and additional topics for 401k partners.  A strong fiduciary training program makes sense for all 401k committees and plan sponsor fiduciaries.

Full Transcript Here

This is Colin Clark. I’m a retirement plan consultant with Washington Financial Group here in the DC metro area and I’m here today with Jewell Lim Esposito, a risk attorney practicing with FisherBroyles. You’re partner there. So welcome, Jewell.

Thank you, Colin.

It’s good to be here with you. Is it okay if we ask you a few questions today?


So we’re down to question number two of our top ten. So before we get to the last question, Jewell, there’s a lot of talk right now about plan fiduciaries understanding their roles and how they can get trained. Because is it true that if you were to be investigated by the Department of Labor, they’re going to ask you what types of training you’d received?

Yes. The Department of Labor and the Internal Revenue Service want to know that fiduciaries know what they have to do under ERISA with respect to running the plan. How to select their vendors for example, how to assess if fees are expensive, how to determine if participants are being charged too much inside of their plan accounts.

So is there any formal training out there? Are there types of things that people have access to that you know about?

I do know. I’ve attended certain TPSU seminars. They’re held regularly throughout the nation and there, fiduciaries get trained on what I told you about. How to select their vendors, how to understand their personal liability with respect to what they’re doing, how to select the specific investments given the demographics of their employee population.

No, absolutely. I know as an adjunct lecturer for TPSU in our area, we’ve had the privilege of having you join us as we’re doing that training and so it’s pretty much a full day of understanding what types of fiduciary responsibilities a plan sponsor have. Right?

Yes. I see that it’s a full day but I think then the fiduciaries understand that they have to have regularity with meetings, making sure that everyone knows the processes by which they will select their investment platform, when they have to pay attention to deadlines for tax returns, et cetera.

No, that’s great, Jewell. So really at the end of this though, are there certain items or things that plan fiduciaries need to show the Department of Labor or IRS?

Sure. I think to defend and ensure that the fiduciary has done all that it had to do under the standard of prudence, then it should have the documentation to show that they received training with respect to how to select vendors, how to benchmark their plan, how to review performance results. That will all help the fiduciaries explain to the IRS and the Department of Labor that they did act under a prudent standard, which is what’s required of them.

Oh, that’s excellent. Thank you very much, Jewell. And so stay tuned because we have the number one mistake coming up that plan sponsors of 401(K) and 403(B) plans make according to advisors. So this is Colin Clark for 401k TV signing off and we’ll see you for number one.


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