The tangled web of ERISA regulations grows worse each year. Is this too much for companies responsible for maintaining 401k plans?
Tag "Jeff Coons"
It’s tempting to turn your attention to your company, some academic theory, or even—hush!—“best practices.” The truth is, as a fiduciary, you only have one job.
This has been the most challenging of best practices. It has evolved over the years from “you can’t do that” to “you need to do that.” What does it take to make it better? Has the technology environment changed in such a way as to address long-standing obstacles.
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.
Some costs can’t be negotiated. These relatively fixed costs are the same no matter the size of the plan. Bigger plans can absorb these costs over a larger asset base, meaning the per participant cost is lower.
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.
For all the good intentions, however, what will happen when the rubber finally meets the road? Will the new DOL Fiduciary Rule really level the playing field?
Here’s where the greatest controversy of the new Rule, as with its predecessors, comes to a head.
You cannot understate the fiduciary aspect of lower fees. Most 401k plan sponsors, and especially those in smaller plans, don’t have the time or expertise to administer their company’s retirement plan. If they skimp on fees, are they also skimping on the fiduciary protection those professionals are supposed to provide?
