As you know, fiduciary responsibility under ERISA is very important to 401(k) plan sponsors. Fiduciaries have significant responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. Ensuring that disclosures are adequate and that plan fees and expenses are reasonable are two aspects of these responsibilities.
BENCHMARKING TO HELP ENSURE THAT 401(K) EXPENSES ARE REASONABLE
As you know, fiduciary responsibility under ERISA is very important to 401(k) plan sponsors. Fiduciaries have significant responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. Confirming that fee disclosures are adequate and that plan fees and expenses are reasonable are two aspects of these responsibilities.
I’m Bonnie Fawcett, Senior Vice President and Managing Director of the Vested Interest® Defined Contribution Program at PNC Bank.
As you’re aware, two sets of U.S. Department of Labor fee disclosure regulations went into effect in 2012 to help ensure that retirement plan sponsors and plan participants have adequate information to evaluate the value of services received for the fees paid.
As part of the Department of Labor’s 408(b)(2) regulation, you will need to verify that you have received fee disclosures from all plan covered service providers.
The 404(a)(5) regulations require plan administrators to disclose certain plan- and fee-related information to plan participants. You must also confirm that disclosures are adequate under new rules and that fees paid are reasonable based on the investment options and services being provided.
Your fee disclosure review presents an opportunity for you to take a good look at your current program to make sure it’s meeting objectives — those you’ve established for your 401(k) plan, as well those of your participants. Cost is important, but it’s only one of the criteria you need to evaluate. You need to assess the quality and type of services provided, as well as compare investment products and options on the basis of expenses and investment performance.
Once you’ve evaluated these aspects of your plan, you need some way to compare your plan and expenses with those of your peers. (Pause, change in thought) Your retirement plan provider, along with your ERISA counsel, can be helpful.
Benchmarking against comparable organizations’ plans is often the most costeffective and least disruptive method to determine whether fees are reasonable.
It involves comparing your plan to a group of organizations that resemble your own. A thorough benchmarking process will balance fee components and value components – a comprehensive approach that provides the context needed to truly assess the reasonableness of a plan’s fees. A thorough, objective benchmarking process should determine:
• How your plan costs compare with those of your peers
• Whether your plan costs are reasonable based on the level of service
• If the plan offers participants a diversified choice of investments
• Whether the plan is performing as designed
The results of the benchmarking process should help you determine if you need to update any component of your plan, and just as important, could improve your plan’s success.
For more information about benchmarking value and fees, or other aspects ofretirement plan administration and compliance, please contact me using theinformation on the next screen.
Thank you for your time and attention.
|The Impact of Auto Enrollment||The Impact of Auto Enrollment||Manage Assets||Read Now »|
|Your Financial Fitness Checkup||Your financial fitness checkup||Manage Assets||Read Now »|
|Asset Protection Planning||Asset protection planning and Delaware asset protection trusts||Manage Assets||Read Now »|
|The 2014 Retirement Policy Landscape||A Review of the 2014 Retirement Policy Landscape||Manage Assets||Read Now »|
|The Affordable Care Act Update||The Affordable Care Act Update: Navigating its changes and challenges||Manage Assets||Learn More »|
|The Retirement Policy Landscape||The Retirement Policy Landscape: What Plan Sponsors Need to Know||Manage Assets||Learn More »|
|Investment Strategy Quarterly||Investment strategy quarterly||Manage Assets||Read Now »|
|A Solid 401(k) Plan Begins With the RFP||A Solid 401(k) Plan Begins With the RFP||Manage Assets||Read Now »|
|Are 401(k) Expenses Reasonable||BENCHMARKING: Are 401(k) expenses reasonable?||Manage Assets||Read Now »|
|Setting Goals For Your Retirement Plan||Setting Goals For Your Retirement Plan||Manage Assets||Read Now »|
|Defined Contribution Plans||Eight misconceptions of defined contribution plans||Manage Assets||Read Now »|
|Mobile Banking||Move your business forward||Manage Assets||Read Now »|
|Managing Assets For Retirement||Managing assets for retirement||Manage Assets||Learn More »|
|2014 M&A Outlook||M&A: How will your business be impacted?||Manage Assets||Learn More »|
|Mobile Banking||Mobile banking for financial decision-makers||Manage Assets||Read Now »|
|New Mobile Banking Solutions||Move your business forward with new mobile banking solutions||Manage Assets||Learn More »|
|Healthcare and Retirement||Healthcare costs and retirement insecurity||Manage Assets||Read Now »|
|Solid Company Retirement Plan||Setting the cornerstone for a solid company retirement plan||Manage Assets||Read Now »|
|Virtual A/P Cards||A working capital case study||Manage Assets||Learn More »|
|Increase Your Company's Value||Companies are being rewarded for increasing their rates of return on cash flow||Manage Assets||Learn More »|
|Investment Policy Statement||Does your company have a well-thought investment policy?||Manage Assets||Learn More »|
|Conditions in the Loan Market||The role of capital markets and hedging strategies||Manage Assets||Learn More »|
|Affordable Care Act Challenges||The impact of recent developments on your organization||Manage Assets||Learn More »|
|Five Threats to Your Retirement||Current issues in retirement planning||Manage Assets||Read Now »|
|Defined Contribution Plans||Eight misconceptions of defined contribution plans||Manage Assets||Learn More »|
|Reasonable 401k Fees and Expenses||Benchmarking for that 401(k) fees and expenses are reasonable||Manage Assets||Read Now »|
|Trends in Defined Contribution Plan Design||Current trends in retirement plans||Manage Assets||Learn More »|
|PNC Delaware Trust Company||Strategies for wealth protection||Manage Assets||Learn More »|
|Redefining Retirement||Fresh look at 401(k) plan accounts||Manage Assets||Read Now »|
|Fortifying Your Own Financial Future||Fortifying your own financial future in turbulent times||Manage Assets||Read Now »|
|Workplace Banking||Workplace banking||Manage Assets||Read Now »|
|New issues in wealth management||Retirement planning||Manage Assets||Read Now »|
|Escrow Services||Agent's Role in Escrow services||Manage Assets||Read Now »|
|Fortifying Your Financial Future||Financial planning for executives||Manage Assets||Learn More »|
|Retirement in the New Normal Economy||401(k) advice and management||Manage Assets||Learn More »|
|401(k) Plans Still Viable||401(k) plans||Manage Assets||Learn More »|
|Liquidity Management||Short-term cash investment strategies||Manage Assets||Learn More »|