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Fiduciary Advisor Blog
401(k) (7)An RSPS may be the most important document in your Fiduciary Arsenal. If you are a Fiduciary to an ERISA qualified retirement plan and you don't have a documented process in how fees are allocated to the plan participants and the employer-sponsor, you could find yourself at the wrong end of an excessive fee dispute.
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401(k)
Monday, 09 April 2012 12:36
The Latest in Revenue Sharing and Excessive FeesWritten by Mark GriffithAs a Plan Fiduciary, you cannot rely on a non-fiduciary service provider with a conflict in interest to accept responsibility for their recommendations. In a recent court decision (Tussey vs. ABB, Inc., U.S. District Court, Western District of Missouri Central Division), a Company sponsoring a retirement plan (ABB, Inc.) along with the head of the Benefits committee, named individually, and the entire committee, were ordered to pay a judgment of $35.2 million.
Published in
401(k)
Scire est mensurare
A retirement plan fiduciary must act to defray “reasonable expenses of administering the plan”. In addition they may contract a party in interest for services “if no more than reasonable compensation is paid therefor”. (Title 29 §1104(a)(1)(A)(ii))
These duties have been law since the enactment of ERISA in 1974. Due to both the lack of clarity on the definition of “reasonable” and the difficulty in obtaining appropriate information, most plan fiduciaries have swept this responsibility under the rug. The good news is that beginning April 1, 2011, all parties receiving compensation from retirement plan assets must report that compensation to the applicable plan fiduciary.
Published in
401(k)
Thursday, 27 October 2011 11:23
Participant Fee Disclosure in 401(k) Plans: Part III of IIIWritten by Mark GriffithPart III: Advanced planning can mitigate discontent In Part I and II of this series, I discussed how the new participant fee disclosure regulations under §404a-5 will cause increased confusion among participants without necessarily improving the participants’ investment decision making process. In summary, the regulation is intended to give participants investment expense and performance information so they make better investment decisions. The unintended consequence of the regulation will cause participants in some plans to remain clueless as to the true cost of sponsoring a retirement plan and others with a discernable layer of expenses, fully disclosed, and although potentially less costly than the bundled alternatives, confused as to why they are necessary.
Published in
401(k)
Monday, 10 October 2011 13:31
Participant Fee Disclosure in 401(k) Plans: Part II of IIIWritten by Mark Griffith
Part II: A drastic change that won’t change much In Part I of this series, I discussed the basic premise of the new participant fee disclosure regulations known as §404a-5. I mentioned that the intent of the regulation is to “ensure that all participants and beneficiaries in participant-directed individual account plans have the information they need to make informed decisions about the management of their individual accounts and the investment of their retirement savings”. Although the above description of intent is certainly noble, the details in the regulation will foster confusion among participants and worse, promotes the elusive hidden fee practices of some major “special interest” providers that the regulation was originally designed to expose.
Published in
401(k)
Thursday, 08 September 2011 10:45
Revenue sharing can be a good thing: Depending on who is getting the “sharing”Written by Mark Griffith(author’s note: The following article was written in 2007, long before current regulations were promulgated) Fee structures in qualified retirement plans, especially in participant directed plans, have become extremely complex. For many Plan Sponsors, actual fees and expenses paid can appear quite simple or may not appear at all. This is primarily due to the lack of disclosure that has been predominant in the industry. It is incumbent on the plan fiduciaries to have a full understanding of all revenue that is being received by all providers of plan services to determine whether or not the revenue level is ultimately justifiable.
Published in
401(k)
Thursday, 08 September 2011 10:50
Participant Fee Disclosure in 401(k) Plans: Part I of IIIWritten by Mark GriffithThe new participant disclosure requirements are to go into effect in May of 2012. Many in the industry are having tizzy fits over what the ultimate consequences might be. Plan vendors (recordkeepers, insurance companies and mutual funds) are scrambling to figure out the best way to present their costs, plan advisers are nervous about justifying their expenses to participants and investment "purists" are salivating at the opportunity to attract significant business through the use of passive, low cost investments (index funds, ETF's, etc.) and full disclosure.
Published in
401(k)
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