Here the intent is to make it possible for a plan/IRA to apply the QDIA safe harbor to involuntary rollovers. But how will this impact plan participants?
Tag "liability"
Here’s the real conundrum faced by 401k plan sponsors: They realize they don’t have the expertise to administer the plan. So, what do they do? It’s only natural they do seek outside help for their retirement plan. The trouble is, not all third parties are created equal. But does the average plan sponsor know this?
Not only do pooled plans reduced the administrative burden, but they can also reduce the fiduciary liability for 401k plan sponsors. If you’re not constantly looking over your shoulder, you can spend more time with your nose to the grindstone.
The central role of the recordkeeper can create reverberations with other providers should the plan sponsor attempt to change recordkeepers. Any hiccup in the employees’ ability to manage their retirement assets can cause problems for plan sponsors.
It’s too easy for plan sponsors to get lost in the weeds when dealing with plan minutia. Yes, “the buck stops here” reality can overwhelm many. Delegation is the key. It’s also the Achilles Heel. This is where the magic word emerges.
“Industry participants also argue that the rule transforms one-off transactions into fiduciary relationships in violation of the common law, but the common law of the states is divided on this, and there is a need for a federal standard regulating investment advice fiduciaries.”
This isn’t a compliance audit, it’s an operating efficiency audit. That covers plenty of ground, from technology to benchmarking the value offered by the service provider.
If plan sponsors are working with the appropriate plan fiduciary, then an ongoing review of the fund’s performance, fees, and underlying risk should be part of their ongoing process
Herein lies the potential for a direct conflict of interest. This applies generally to all proxy voting in commingled portfolios.
Since actively managed funds have lagged index funds, does this case put their continued use in ERISA plans at risk?
