For retirement plan sponsors, a great way to head into the fall is with a brush up on fulfilling fiduciary obligations. Fortunately, it’s easy and free to pull a reading list together: the Employee Benefits Security Administration (EBSA) provides a range of pragmatic publications focused on specific topics that tend to cause confusion.
Pragmatic Guidance For Plan Sponsors
In addition to hosting webcasts and seminars around the country, EBSA’s Fiduciary Education Campaign, “Getting It Right,” provides free publications, readily available as PDF’s, to help plan sponsors key in on their essential responsibilities. A great place to start, whether new to plan sponsorship or looking to brush up, is with the Meeting Your Fiduciary Responsibilities overview. From there, consider sharpening your knowledge on areas known to be problematic, such as fees, monitoring and audits, with help from these three brief and targeted publications:
- Understanding Retirement Plan Fees And Expenses
This booklet will help retirement plan sponsors better understand and evaluate their plan’s fees and expenses. While the focus is on fees and expenses involved with 401(k) plans, many of the principles discussed in the booklet also will have application to all types of retirement plans.
- Selecting An Auditor For Your Employee Benefit Plan
Federal law requires employee benefit plans with 100 or more participants to have an audit as part of their obligation to file the Form 5500. This booklet will assist plan administrators in selecting an auditor and reviewing the audit work and report.
- Tips For Selecting And Monitoring Service Providers For Your Employee Benefit Plan
Business owners are responsible for ensuring that their 401(k) plans comply with Federal law and rely on other professionals to assist them with their plan duties. Selecting a service provider is one of the most important responsibilities of a plan sponsor.
Reporting and Choice Making
Sign-off is a major responsibility for plan sponsors, and there is an associated penalty of perjury. What reports and disclosures do you typically sign off on for your plan–and when? Are you sure you are not missing something? Is the data you are submitting accurate? Consult EBSA’s Reporting and Disclosure Guide for Employee Benefit Plans for “a quick reference tool for certain basic reporting and disclosure requirements under ERISA.”
Selecting and monitoring investment options and consultants to advise the plan are other major plan sponsor obligations. Here are two more handy EBSA publications to reference:
- Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries
Target date retirement funds (also called target date funds or TDFs) have become an increasingly popular investment option in 401(k) plans and similar employee-directed retirement plans. EBSA prepared the following general guidance to assist plan fiduciaries in selecting and monitoring TDFs and other investment options in 401(k) and similar participant-directed individual account plans.
- Selecting And Monitoring Pension Consultants – Tips For Plan Fiduciaries
ERISA requires that fiduciaries of employee benefit plans administer and manage their plans prudently and in the interest of the plan’s participants and beneficiaries. In carrying out these responsibilities, plan fiduciaries often rely heavily on pension consultants and other professionals for help….A report by the SEC released in May 2005, however, raise serious questions concerning whether some pension consultants are fully disclosing potential conflicts of interest that may affect the objectivity of the advice they are providing….
Cybersecurity
While brushing up on fiduciary guidance, don’t forget that plan sponsors have the obligation to mitigate cybersecurity threats, and add a read of the DOL’s Cybersecurity Best Practices to your list. Recently, the Department of Labor leadership has also recommended cyber liability insurance which explicitly covers the business and plan, and urged response and notification services following all cybersecurity incidents.
As the ultimate decision makers and monitors for the company retirement plan, sponsors can be held personally liable for damages to the plan. Consider for example, that even a relatively small cybersecurity incident can result in a fiduciary breach allegation that puts personal assets at risk. Colonial Surety Company offers one, efficient and affordable solution to meet DOL expectations—and protect the personal assets of sponsors. For a few dollars a day, our Fiduciary+Cyber Liability Insurance Combo:
- Reduces the personal risks of plan sponsors, by providing defense costs and penalty limits up to $1,000,000, in the event of alleged or actual breaches of duty in connection with the employee retirement plan;
- Addresses Department of Labor cybersecurity recommendations;
- Explicitly covers the business and the plan in the event of a cyber breach; and,
- Provides expert response and notification services following a cyber breach.
One thing you don’t have to do as a plan sponsor is continue shouldering all the risks alone. Take a few minutes now, and ensure you’re fully protected ahead of the busy fall season. We’re right here to help:
Fiduciary+Cyber Liability Insurance Combo
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