Is Your 401(k) Plan Successful for Your Company?

By Michael R. Smith

By just about any measure, the 401(k) industry has been a colossal failure for the employers and participants it should be serving. 

If you think about it, this shouldn’t be much of a surprise.  The majority of 401(k) “service providers”, regardless of their specific capacity, are in businesses that have one major goal:  to get assets under management so that they can derive “soft dollar” (read largely invisible) income from those assets.  Does that goal tie in with the creation and maintenance of a “successful” employee benefit program that is cost-efficient for employer and participants?  Well, the numbers say “no”.  Consider this:

Are you prepared for the Department of Labor's (DOL) 408(b)(2)requirements?

Do you have a complete understanding of what it is, how you should deal with it, and the hidden perils for failure to comply? This new regulation deals with plan level fee disclosures for any Defined Contribution or Defined Benefit plan covered by ERISA. Plan fiduciaries (you) must receive specified service and compensation disclosures from all Covered Service Providers (CSPs) to your plan by July 1^st.  Next year, your auditors will want to confirm that you took the appropriate steps to comply.

For months, plan service providers have been fretting about making their required fee disclosures because for most, it means putting a spotlight on shockingly high fees for the very first time!  Until now, they could easily be concealed.  In the disclosures we’ve seen thus far, CSP’s have treated their disclosures in a very business-as-usual way – probably because they hope you won’t notice.  But we’re here to make sure that dream doesn’t come true.