In
the past, the traditional role of managing a plan
was handled by various sources and was often hit
and miss. The environment today, however, calls
for more awareness and education on the part of
plan sponsors, understanding compliance, ERISA,
404(c), documenting prudence and addressing the
needs of sponsors and their participants. This
information should be available and provided by
the "expert" hired to help the sponsor
with the plan.
With NO CLEAR STANDARDS for how a plan
should be managed, either on the part of sponsors
or advisors servicing a plan, it is easy to see
how shortfalls could exist. Today, there are new
standards dictated by fiduciary awareness and
ERISA legislation. The 401k Service Solution is
a prudent process that provides a practical way
to meet the NEW STANDARDS that must be
implemented in order to remain compliant.
Not fully understanding how to build a successful retirement plan
Not having goals for the plan
Relying on participation rates alone to gauge for success
Shortfalls found during audit or compliance test
Reviewing and documenting a vision of success
Clarifying plan goals to monitor success
Success dependent on several factors important to both sponsor and participant
Identify plan shortfalls before they become compliance issues
No IPS, or
IPS creatd by professional and no input from sponsor
Sponsor does not understand IPS or its importance
IPS not actively engaged during reviews or updated
Sponsor has clear understanding of what is required by ERISA
IPS is created based on input from sponsor
IPS is created first and leads the process
IPS is used effectively to help reduce liability
Sponsors not fully aware of fiduciary responsibilities
Reviews may be conducted but not usually meeting uniform standards of care
ERISA standards not being understood or met
Sponsors understand importance and reasons for process
IPS used as guide for reviews
Compliance with prudent practices are documented
Stack of proposals with no clear guidance to compare
Selecting providers based on fees (or name)
Investment selection led by performance vs. defined objectives
Not having a full understanding (fees vs. industry)
Comparisons viewed on level playing field
Due diligence conducted and documented
Investment selection led by criteria in IPS
Expenses revealed, fees and commissions transparent
Little to no education provided
Shift to online services, little face to face
Participation and deferral rates low, not prepared for retirement
Identify participant needs and design program around them
Set up education program a year in advance and monitor its effectiveness
Participants making meaningful contributions toward a successful retirement
Regulatory changes create nervous sponsors
Sponsors not fully understanding plan management responsibilities
No system in place to cover plan reviews
Proactively provide information on changes and updates
Sponsors educated on topics they identify as important
Checklists and calendar are used to plan and identify issues
