Selecting the right 401(k) service providers protects you and can save money
The advent of risky, new investment vehicles already had the Department of Labor’s Employee Benefits Security Administration (EBSA) asking questions of retirement plan sponsors, and now they are asking even more questions as the turmoil on Wall Street continues to threaten the retirement nest eggs of the nation’s workers.
The EBSA is responsible for administering and enforcing the fiduciary, reporting, and disclosure provisions of Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Title I must be followed carefully by all 401(k) and retirement plan sponsors.
As a retirement plan sponsor, are you prepared to answer the administration’s questions about your fiduciary responsibility, such as:
- What criteria were used to select the advisors, providers, administrators, and underlying investments?
- How are advisors, providers, and administrators being paid?
- What fee-sharing arrangements or reimbursement relationships exist between the investment companies and your advisors, providers, and administrators?
- What services are the participants or you paying for?
- How do you monitor the reasonableness of the fees being charged?
- What documentation exists to support your vendor selection conclusions?
ERISA mandates due diligence
You can benefit from our proven service provider selection process and our experience working with more than 4,000 benefit plan clients each year. Our employee benefit consulting team is composed of attorneys, plan administrators, and consultants. They will help you perform the due diligence you need to find the right plan administrator, custodian, trustee, and investment advisor to fulfill your fiduciary responsibility.
We will help you develop requests for proposals (RFPs) from the service providers, and we will help you develop criteria to evaluate the proposals. We will analyze the proposals identifying unique features and limitations, and verify that the proposed fees and expenses are in line and that the providers are insured against losses resulting from fraudulent/dishonest acts. We will help you evaluate the customer service and participant education they provide, and check with state and federal authorities to confirm the providers have up-to-date licenses and no pending complaints.
Taking all of these and other factors into consideration, we will assist you in selecting the vendors that maximize the potential for meeting your performance criteria while at the same time upholding your fiduciary responsibilities. In most cases, our process also helps find service providers that save money for the plan sponsor and its participants. In all cases, we carefully document the selection process according to the requirements of the EBSA.