SAM 401(k) Solution

Delivering state of the art Fiduciary Management, the 401(k) Solution Program was developed amid Department of Labor (DOL) regulations taking effect. There are specific criteria outlined by the DOL on how Trustees are to act with respect to the management of qualified retirement plans. Congress also has recognized the need to enforce stricter requirements that are designed to reduce plan expenses where possible, foster greater participation by employees and provide plan options that will offer a greater chance of investing success.

Under Section 408(b)(2) Service Providers of retirement plans are required to disclose all comprehensive information of their fees and reveal any potential conflicts of interest to ERISA-covered Plan Fiduciaries. The effective date of the Final Rule is set for July 1, 2012. Announced Thursday February 1, 2012; Plan Administrators will now make initial annual disclosure of "plan-level" and "investment level" information to participants no later than August 30, 2012, and the first quarterly statement must be furnished no later than November 14, 2012.

This new amendment was developed to work in conjunction with the 60-Day Transition Rule; Participant Level Fee Disclosure under Section 404(c). Plan years beginning on or after November 1, 2011 require Employers, who direct their own investments, to disclose information on their ERISA-covered 401(k) and other individual account retirement plans and investment costs to their workers.

According to the DOL, the final rule provides that the investment of plan assets is a Fiduciary act governed by the fiduciary standards in ERISA section 404 (a) (1) (A) and (B), which require plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries. It also provides that when a plan allocates investment responsibilities to participants or beneficiaries, the plan administrator must take steps to ensure that such participants and beneficiaries, on a regular and periodic basis, are made aware of their rights and responsibilities with respect to the investment of assets held in, or contributed to, their accounts and are provided sufficient information regarding the plan and the plans investment options, including fee and expense information, to make informed decisions with regard to the management of their individual accounts.

There are various categories of information that must readily be made available. The information must be given to participants on or before the date they can first direct their investments, and then again annually thereafter. This includes plan-related information and investment related information. The presentation of the information must also be furnished and presented in a comparative format.

DOL Expectations

• Due Diligence

• Transparency

• ERISA requires the CFO and the CEO to be experts on costs, conflicts, and compliance issues

*Fiduciaries need to take all necessary action and allocate the time to review their costs, eliminate conflicts and correct mistakes. As part of your Due Diligence; you want to evaluate the requirements along with your plans current structure & organization. CFO’s should be aware that these new disclosure rules could entail significant personal responsibility/liability and therefore should be taken seriously.*

Wearing the Fiduciary Cap

Under ERISA, anyone who has discretion over plan management or plan assets is considered a Plan Fiduciary. All key players include; record keepers, custodians, third-party service providers, and the all-in-one administrators (CEO/CFO).

Think You Have a Guarantee?

A Fiduciary Guarantee 3(21) does not absolve Plan Sponsors who are signed as Fiduciaries of any personal risk in the event the plan does not meet ERISA compliance.

Whereas a strategy utilizing 3(38) Fiduciary Assistance can protect you and your company from personal risk and costly litigation.

Fiduciaries Keeping Alert

Click Here: Retirement Plan Fees Resource Guide

1. Think twice before offering retail share classes as investment options when less expensive institutional share classes are available.

2. Know what you are paying: plans often pay too much for the services they are receiving

3. Evaluate your level of Personal Risk: 1) Sole Responsibility, 2) 3(21) co-fiduciary to the plan, this does not relieve the plan sponsor of fiduciary responsibility, 3) 3(38) Fiduciary Assistance the Investment Manager acknowledges, in writing, that he is a Fiduciary accepting the responsibility and accountability for the selection of the investment array.

4. This burden on Fiduciaries has the potential to rack up a high price tag in the event the plan is deemed non-compliant. As an example, a small plan with $100,000 could fare up to $15,000 in fines.

As YOUR future 401(k) plan fiduciary, I pledge to you the following: