How is DOL Fiduciary Rule is Affecting 401k Plan Sponsors?
At a TPSU program held at Virginia Tech’s Arlington campus, senior audit manager at a CPA firm that conducts 130 benefits audits annually discusses how 401k plan sponsors are reacting to the DOL rule and how DOL fiduciary rule is affecting 401k plan sponsors in their day to day operations.
While the DOL fiduciary rule has gotten the attention of most of the CPA’s clients, other than identifying which providers are fiduciaries, the rule is not affecting day to day operations. Most plan sponsors are working with third party vendors to make sure that the plan is operating within the parameters of the plan documents, is in compliance and that payroll is properly integrated with their 401k plan.
The DOL rule could potentially increase costs which might hurt participants, notes the CPA, as more TPAs and even advisors will need to act as fiduciaries which may make their services more expensive. On the other hand, dabblers or those not committed to the 401k industry may exit completely leaving companies and participants in more capable hands.
Regardless of whether the DOL rule is delayed, which the CPA does not believe will happen with the April 10th deadline looming and the need to act more quickly than is normal in DC, plan sponsors need to hire qualified providers and advisors that help their clients with three important areas:
1. Process
2. Best Practices
3. Internal Controls
The DOL rule is raising the consciousness of plan sponsors realizing that the hiring decision, as well as ongoing monitoring, is an essential fiduciary act which, if not done prudently with proper documentation, can lead to dire consequences for the company and, even worse, poor results for employees who are becoming more and more dependent on their employers to help them save for retirement.
