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Emboldened by a Supreme Court win and a string of settlements, employees have filed several new class-action lawsuits against employers. The cases usually center around excessive fees, poor plan designs and alleged conflicts of interest.

Employees argue that because their employers are considered fiduciaries when they offer a 401(k) plan, they’ve breached that duty by allowing high fees, bad fund choices and conflicts of interest.

Excerpt from CNBC article, May 2016

Thus a New Law You Need to be Aware of:

Studies show that 3 out of 4 small business retirement plans are not compliant with current regulations. The law is changing on April 10, 2017 and it is targeting and holding the fiduciary responsible for compliance and to act in the best interest of the participants.

Are you the fiduciary of your plan?

If you answer yes to any of the following questions then you are likely a plan fiduciary:

  1. Are you named in your 401K plan document?
  2. Do you play a role in the management or administration of the plan?
  3. Do you provide advice to the plan or the plan participants?
  4. Do you select or supervise employees who answer yes to any of the questions above?

What does that mean? It is your legal responsibility to act in the best interest of your plan’s participants and on April 10, 2017 the new regulations specifically target plan fiduciaries.

Bottom line is, if you do not clearly understand the processes and fees involved in your plan and/or you haven’t looked at options in the last 3 years, it is time to do so. Below is a list of annual items that should be reviewed and documented on an annual basis to be in compliance with the regulations.

  • Confirm definition of “eligible employee” is consistent with the plan document
  • Has all testing been completed in a timely manner? (ADP, ACP, Top Heavy?)
  • Has Form 5500 been filed in a timely manner?
  • Review the plan’s process of collecting deferral contributions and loan payments
  • Identify all Plan Fiduciaries and ensure they understand their responsibilities
  • Confirm the plan’s ERISA Bond is at least 10% of plan assets
  • Review required service provider fee disclosure under ERISA Section 408(b)(2)
  • Confirm formal process for evaluating the investment menu
  • Maintain document file with all communication with plan participants
  • Confirm formal process for handling and maintaining beneficiary records

You may not have the knowledge nor the time to focus on these actions and if the advisor that oversees your plan has not contacted you about this new regulation by now, then maybe it is time to contact someone else.

Full Disclosure – My son is a 401K specialist and financial advisor. If you are looking for another firm to help you and do a complimentary:

  • Review of your current plan (testing, fees, allocations)
  • Do the work to get you in compliance as the fiduciary of your plan
  • Provide independent analysis of multiple carriers to bid on your plan
  • Make the best decisions to satisfy your legal obligations

Here is an option if you are in New York : Contact : Jayce Wallace, Floss Agency,