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The mission of the Partners is to empower all of us to go directly to each other with our expertise. FiduciaryFirst is considered an industry leader and our knowledge and informative blogs can help you gain an understanding about key topics within the industry.

ERISA Lawsuits Highlight Risks for Fiduciaries

ERISA Lawsuits Highlight Risks for Fiduciaries
Recent class action suits filed against Home Depot, First Group America, Aon Hewitt, Financial Engines and Alight seek millions in restitution. Two class action suits — one involving Home Depot and the other FirstGroup America — allege that failure to adequately perform oversight of outside fund advisors violated the sponsors’ fiduciary duties and ask for millions in restitution. According to the complaint, the Home Depot action alone, if certified, would incorporate more than 300,000 current and former employees. The Home Depot complaint names not only Home Depot Inc., but also its Administrative and Investment committees and their members. Outside advisors Financial Engines Advisors and Alight Financial Advisors and plan record keeper Aon Hewitt are also named. The 98-page complaint lays out an exhaustive case, which alleges a number of failures in performance of fiduciary duties, including: Home Depot allowed plan participants to pay unreasonable fees to the advisors. The advisors...
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Four Ways to Increase Employee Retirement Contribution Participation

Four Ways to Increase Employee Retirement Contribution Participation
As a retirement plan sponsor, can you encourage your employees to save and save more? A significant amount of research says that yes, you can improve both employee participation and their saving rates. Here are four ways you can help your employees start building a confident retirement: Boost employee participation with automatic enrollment. Choosing to automatically enroll all new employees in your retirement plan can dramatically improve your participation rates. According to the Center for Retirement Research (CRR) at Boston College, in one study of automatic enrollment, participation increased by 50 percent, with the largest gains among younger and lower-paid employees.1 While auto-enrolled employees are allowed to opt out of the retirement plan, most generally stay enrolled. Set the initial default contribution rate higher. Many companies who use auto-enrollment set their default contribution rate relatively low at three percent, according to the CRR, which is lower than the typical employer match rate of six...
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Plan Sponsor Focus Shifts to Retirement Readiness

The ninth annual Plan Sponsor Attitudes Study reveals plan sponsors’ top concerns, as well as information on plan changes and participation rates. Fidelity surveyed 1124 sponsors whose plans had at least 25 participants and $10 million in assets, and start-upsto plans with more than a quarter million in assets. Plan sponsors surveyed used an assortment of record-keepers. The study focused on sponsors that use a plan consultant or financial advisor. It found that a historically high proportion of sponsors, 92%, say they work with an advisor. And while 44% of plan sponsors indicate that they’ve retained their current advisor for four years or less, 22% were looking to make a switch. This was down from 38% reported in 2017. In line with previous years’ results, the report indicates a high level of plan sponsor activity, with more than eight in ten sponsors reporting changes to their plans within the last...
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IRS Tips for Plan Sponsors

IRS Tips for Plan Sponsors
As an employer, you’re ultimately responsible for keeping your company’s 401(k) plan in compliance at all times. Your plan document should be reviewed on an annual basis and administered accordingly. The IRS offers useful tips for plan sponsors to help in those efforts. Here are some highlights on their guidance. Understand and verify your adoption agreement options.For pre-approved plans, you may have an adoption agreement that supplements the basic plan document and lists features that may be selected. It’s important to understand this document and specifically what it says about plan eligibility, types and limits of contributions, how contributions are divided among plan participants, vesting and paying benefits. Educate yourself about your service agreement. As a plan sponsor, it’s important to understand what your service agreement does and does not cover. For administrative tasks, it’s imperative to know who will perform these and to make sure that person has the...
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Ongoing Evaluation of a (3)38 Fiduciary

Ongoing Evaluation of a (3)38 Fiduciary
As part of the Employee Retirement Income Security Act of 1974 (ERISA)[1], businesses now follow minimum standards as part of general fiduciary risk management[2]. Under the 38th definition of that act, plan sponsors and associated fiduciaries are absolved of responsibility for the decisions made by the investment manager. However, moderating their risk means evaluating that investment manager and documenting that evaluation on an ongoing basis. But what does this evaluation require? Here are a few things your business should include as you evaluate your own investment plan manager. Manager Background Regardless of regulations, you should take steps to vet your investment plan manager. If you’re entrusting an entire firm with the duty, you should check into the leaders’ credentials and backgrounds. Look for CEFEX certification[3] and make sure they haven’t received disciplinary action by regulatory authorities. Their past experience in delivering advice on investment plans is crucial as well since...
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What Does Your Investment Advisory Service Do for You?

What Does Your Investment Advisory Service Do for You?
Many businesses review their fiduciary processes in the first quarter. Are employees happy with the retirement investment options they’re offered? Are they getting the best return on their investment? As part of that evaluation, many businesses consider their plan advisors. This is the perfect time to reevaluate and consider adding one to your team. Here are a few ways investment advisors can help your business. Plan Design and Documentation Choosing the right retirement plan can be challenging, even for a business with a full human resources department. For established companies, a plan advisor can sit down with the leadership team to review current benefits. And at new companies, advisors can provide counseling on initial decisions. In both scenarios, guidance from advisors can help increase success rates. Investment Monitoring and Advice There are regulations governing retirement plans, so part of your fiduciary process should be ensuring your plan meets those requirements....
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Benefits of Matching 401(k) Contributions

As the unemployment rate has dropped, hiring has grown increasingly competitive, especially for businesses with highly-specialized positions. If you act as a 3(21) fiduciary, it’s important to understand how 401(k) matches factor into the hiring process and how they financially benefit the whole company. Here are a few reasons why offering a 401(k) match helps your business. Competitive Hiring If you don’t offer a 401(k) match, chances are your competitors do, meaning it’s more difficult to attract top talent. A full benefits package that includes a 401(k) match may prevent you from paying top dollar to win candidates who might consider a job offer from your competitors. Reduced Turnover In order to reap the largest rewards attached to a 401(k) match, employees often must work for a particular period of time, known as vesting. This timeframe encourages employees to stay and maximize their contributions to receive the best benefits. Since replacing...
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Boost Your Participant Retirement Readiness Scores with a Professional Retirement Plan Advisor

Retirement Plan Sponsors that work with a professional retirement plan advisor show higher levels of participant retirement readiness, according to a 2014 study from the Retirement Advisor Council.1 The study included 407 employers that sponsor a 401(k) or 403(b) plan, and concluded that: Improve Retirement Participant Preparation Three-quarters of the sponsors surveyed who work with a professional advisor estimate that half or more of their plan participants are on track to a successful retirement. Professional advisors regularly review the readiness of plan participants and provide that information to plan sponsors. Sponsors are then able to act in an effort to improve retirement outcomes for their employees. These actions include increasing communication, educating participants better, adjusting the participant contribution formula, and adopting automatic contribution increases. More than 40 percent of the surveyed companies have their advisors meet individually with participants to provide investment information. Increase Contribution Levels Eighty-three percent of the...
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