A focus on ERISA §408(b)(2) Regulatory developments affecting covered plans, such as defined contribution plans HR Benefit Advisors I N S I G H T I N N.

A focus on ERISA §408(b)(2)

Regulatory developments affecting covered plans, such as defined contribution plans

HR Benefit Advisors

I N S I G H T I N N O V A T I O N I N T E G R I T Y

What is Retirement?

Retirement is the point in a person's life when they have the luxury of deciding how they will spend their day.

Presentation prepared for BNHRA


Federal Government Concerns

Current personal savings rate is

5.0%

Average 401(k) account balance

is $70,000.

Over half of Americans have less

than $50,000

The Simple Fact

Many 401(k) plans are too expensive.

70% of participants think they aren’t being charging anything.

There is an incredible fee-reduction opportunity.



Plan Sponsor Fee Disclosure 408(b)(2)

Participant Level Fee Disclosure 404(a)(5)

Trend towards focusing on “Participant Outcomes”

Broadening the definition of “Fiduciary”

Department of Labor’s Focus

What is your role?

A plan fiduciary’s responsibilities include the following:

• Act in participants’ best interests

• Pay only reasonable plan expenses

• Carry out duties prudently


ERISA §408(b)(2) empowers you with information

You will have the information to:

Understand your service provider’s compensation and services, and

Identify potential conflicts of interest


Fund Fee Discrepancy

Fees are the most important determinant of long-term performance.

Vanguard S&P 500 Index Fund Fund Charge: 0.15%

Principal S&P 500 Index Fund Fund Charge: 1.04%


Fund Fees Matter!

Over time, higher mutual fund fees lead to lower returns.

A 401k with a balance of $100,000 invested over 20 years, returns being equal but fees, the lower fund fees generate a return of $448,000 vs. the higher fund fees generating$311,000.


What is your responsibility?

Review information to determine if plan fees are reasonable

Protect yourself from the prohibited transaction rule by satisfying the class exemption requirements


Criteria for class exemption for plan fiduciaries

Did not know that service provider failed to provide the required information

Reasonably believed that such information was provided

Make written request for required information from covered service provider upon discovery of disclosure failure

• Covered service provider must respond within 90 days of your written request

Notify the DOL within 30 days of the earlier of:• The covered service providers failure to comply; or• 90 days after the written request

• A sample notice from the DOL is available to youin order to report the non-compliance

AND …


Class Exemption cont….

Acting prudently, make a determination whether to terminate or continue the contract

• If information requested relates to future services and is not disclosed promptly after the 90-day period, “terminate as expeditiously as possible, in a prudent manner”




A focus on ERISA §408(b)(2) Regulatory developments affecting covered plans, such as defined contribution plans HR Benefit Advisors I N S I G H T I N N.

Documents