We don’t need more regulation to prevent future Madoffs, we just need common sense (and, perhaps, a tad bit more enforcement of existing regulations). Here are five straightforward rules fiduciaries can follow to avoid their own personal investment Waterloo.
Tag "DOL"
One of the biggest liability risks facing the ERISA/401k plan fiduciary derive from the inability to properly disclose and educate plan participants. The primary reason for this gap may be due to lack of specifics from the DOL regarding plan document contents and distribution of key information to participants. The suggestions offered by the ICI should help remedy this gap.
Does creating an Investment Policy Statement (IPS) reduce fiduciary liability or augment it? Though there’s no clear agreement on this matter, the DOL has long maintained it has greater concern for processes than outcomes. Benefits attorneys often view memorializing the process through an IPS and documenting its successful implementation as the surest way to reduce fiduciary liability.
The 401k fiduciary typically searches for ways to reduce fiduciary liability. This can be done by hiring what the United States Department of Labor (DOL) terms “prudent experts,” particularly in the area of investments. The DOL permits a fiduciary to appoint, among others, a registered investment adviser to reduce personal fiduciary liability.
What most often triggers a DOL audit? What liability exposure does the ERISA/401k fiduciary typically face as a result of a DOL audit? Can a retirement plan fiduciary face criminal charges? What does the DOL auditor expect from the ERISA/401k fiduciary? What are the four critical keys the plan fiduciary should focus on during a DOL audit? Does the DOL have an ideal “Wish List of Materials” they expect an ERISA/401k fiduciary to provide them during a DOL audit?
Conducting a periodic plan diagnostic test is often seen as an easy way for the typical 401k fiduciary to reduce fiduciary liability. An ERISA plan trustee or fiduciary will usually hire an independent fiduciary consultant to conduct a comprehensive plan fiduciary diagnostic test. Here are five critical areas to consider.
The Supreme Court will raise the visibility of the fee structure within the investments of nearly half of all 401k plan assets. Just because the powers that be say it’s so, doesn’t necessary mean your average fiduciary can rely on the decree. Indeed, the Supreme Court of the United States appears poised rule in favor of mutual fund shareholders, yet, at the same time, mislead both 401k investors and fiduciaries.
The United States Department of Labor (DOL) has issued a booklet entitled “Meeting Your Fiduciary Responsibilities.” The DOL created this publication to help Employee Retirement Income Security Act (ERISA) plan fiduciaries better understand their duties and obligations. Included are four “essential elements” of all retirement plans.
A mutual fund’s expense ratio represents only one factor in analyzing the appropriateness of a mutual fund as an investment. Other factors may in fact be more important (including, among other things, portfolio manager tenure, number of holdings, total net assets, investment objective and consistency of returns).
Understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. Here are 10 tips excerpted from the United States Department of Labor booklet “Meeting Your Fiduciary Responsibilities” that may be a helpful starting point.
