DOL Announces 18 Month Delay on Implementation of Fiduciary Rule

FiduciaryDutyA previous blog released by Pension Consultants, “DOL Fiduciary Rule is Here – Are You Prepared?” communicated that the Department of Labor’s (DOL) Conflicts of Interest Rule (also known as the Fiduciary Rule) would be implemented on June 9th of this year. However, On November 27th, 2017, the DOL announced the Final Fiduciary Ruling will be delayed until July 1st, 2019. Continue reading

Will the DOL’s Proposed Fiduciary Rule Change Affect You as a Plan Sponsor?

The Department of Labor (“DOL”) has submitted their final draft of the proposed fiduciary rule to the Office of Management and Budget for final review and approval.  This means that the final rule is likely to be published within the next several months. Continue reading

Why the Results of Tibble V Edison Should Not Concern the “Well-Educated Plan Fiduciary”

There has been a lot of national press over the recent Supreme Court Case Tibble V Edison, which involves the question as to whether a plan fiduciary has an ongoing duty to monitor a plan’s investments.

The basic facts of the case are as follows: Continue reading

How to Use Revenue Sharing and Still Achieve Fee Transparency

There are many costs involved in successfully sponsoring and operating a retirement plan. Those costs can include paying the people who help operate the plan, including internal staff and third party administrators, record keepers, financial advisers, and more. To pay for some of these plan services, plan sponsors may reimburse certain service providers, e.g., administrative and record keeping expenses, through the use of revenue sharing. Although there is some controversy with revenue sharing as the retirement industry moves to more fee transparency, courts have continued to reaffirm that the use of revenue sharing to pay certain plan expenses is, in fact, legal. Plan fiduciaries are still obligated to understand how the record keeping arrangement is structured and what role revenue sharing plays in that set-up. They must ultimately be able to make a determination that the fees are reasonable and the services are necessary. Continue reading

Fidelity Settles 401(k) lawsuits with Employees

In the past, we’ve talked about the roles and responsibilities of being a fiduciary. Fiduciaries to retirement plans have the responsibility to monitor the plan’s service providers, to make sure agreements are reasonable and to confirm that services being provided are necessary.

Recently, Fidelity Investments, the nation’s largest retirement plan provider, was sued by 50,000 current and past employees. Continue reading

How Bundled Services in Retirement Plans are Like Fast Food Value Meals

You pull up to your favorite fast food chain and decide to order a burger, drink and fries, paying for each separately.  But wait – you notice the menu includes a value meal consisting of the burger, drink and fries, but at a slightly lower price.  Everyone likes a deal, so you order the value meal, even though you probably didn’t need the fries after all.  You decide to save the fries for later, but you never get around to eating them, and eventually end up throwing them away.  It would probably have been better to order the burger and drink separately, after all.

We can apply a similar line of thinking when it comes to services made available to you by your plan’s vendors.  Is there value to be gained by bundling services, or should you pay for each service separately? Consider the following scenario: Continue reading

A Guide to Fiduciary Prudence: Part 1, Who is a retirement plan fiduciary?

Like many people, I am a plan fiduciary to my employer’s 401(k) plan. Because of my background in employee benefits law, I am keenly aware of the role, risks and responsibilities associated with this fiduciary status under ERISA.  Some people, however, are unaware that they are a plan fiduciary while others may be aware of their fiduciary status, but do not fully understand the scope of the risks, liabilities, duties and responsibilities that they have assumed as a result of their relationship to a retirement plan.

I will be writing a blog series in the coming months to help clarify some of the issues simply being a plan fiduciary present, and will help bring to light how potential risks may be mitigated. Several key elements should be addressed to help you properly manage your fiduciary responsibilities, and will therefore be topics in this blog series:

  1. Who is a plan fiduciary? Continue reading