10 Steps to Ensure You’ll Be in Fiduciary Hot Water …
By Robert Higgins, JD, CEBS, APM, AIFA
There are a few proven ways to make sure you’ll end up in fiduciary hot water … follow these steps and you’re sure to find an auditor at your door.
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DON’T worry about forwarding employee deferrals – even though the government says withheld wages become “plan assets” when they can be segregated from company funds, DON’T forward plan assets immediately!
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IGNORE plan provisions – interpret the plan in any way you want -- who cares about “reasonably and consistently”? Oh – and be sure to treat some of the participants DIFFERENTLY, change the rules on a case-by-case basis.
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OVERLOOK your responsibilities – why pay for plan fiduciary training or expert help? DON’T help fiduciaries meet their responsibilities.
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RARELY meet -- who needs a formal meeting schedule to ensure the plan sponsor and service providers have a mutual understanding of plan goals and objectives?
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RANDOMLY select plan service providers and investments - DISREGARD plan needs, roles, and measurement standards. Select based on ARBITRARY criteria or outside relationships.
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NEVER communicate openly with participants – the less they know, the less they can complain (or sue). Make sure they know nothing about the plan, the processes used and decisions made. Make sure you meeting summaries are password protected so no one can accidentally read them.
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NEGLECT service provider shortcomings – why measure performance vs. established benchmarks? Why would you read and understand reports, check fees for accuracy and monitor responses to participant inquiries?
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DEVALUE your evaluation process – FORGET to establish objective performance measurement standards and NEVER report the results.
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IGNORE deadlines to file governmental reports –The deadlines are just a suggestion aren’t they? PLEAD IGNORANCE about reporting deadlines.
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THROW ALL THE PLAN RECORDS IN A SHOEBOX AND IGNORE THEM! What good would accurate records be? Who needs a “Fiduciary Due Diligence” file containing all plan documents and records of decision making anyway?
But seriously, after almost three decades of reviewing and fixing retirement plans, we know the failure to adopt fundamental practices can result in regulatory intervention and potentially significant personal liability for plan fiduciaries. If you think your plan may be in trouble contact an expert for assistance to review and correct your plan governance procedures – before the IRS or DOL contacts you!
About the Author
Robert Higgins is the lead consultant for the Fiduciary
Services practice of Benefit Plans Plus, where he is responsible
for assisting clients in defining and fulfilling their ERISA
and investment fiduciary duties. He has published articles,
made live and internet presentations to local, regional and
national audiences. He has more than 28 years of experience
in the qualified plan business with several major regional
and national organizations. For more information contact
Bob at 314.983.1358 or rhiggins@bpp401k.com.
About Benefit Plans Plus
Benefit Plans Plus, LLC offers customized
retirement plan design and administration, fiduciary
compliance management and consulting services for retirement
plans. Through unique offerings including the Fiduciary
Health Check™ and the SBO
401k BPP serves nearly 750 retirement plans throughout
the Midwest.
Benefit Plans Plus holds the Centre for Fiduciary Excellence,
LLC (CEFEX)
recordkeeper certification for third party administrator
services and the American Society of Pension Professionals
and Actuaries (ASPPA) seal of service for provider excellence
-- the top recognitions in the industry. BPP is a member
of NIPA, ASPPA and ICEBS. In addition, the well credentialed
team of retirement plan specialists averages at least 17
years of experience each. For more information about Benefit
Plans Plus, a subsidiary of Brown Smith Wallace, LLC, visit www.bpp401k.com or
call 314.983.1200.
Information provided in partnership with 401khelpcenter.com, LLC. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. We do not endorse and disclaims any and all responsibility or liability for the accuracy, content, completeness, legality, or reliability of the material. THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED AS LEGAL, TAX OR INVESTMENT ADVICE.