Fiduciaries of defined contribution retirement plans are under closer scrutiny than ever before. Plan participants are filing lawsuits, the media has increased its attention on fiduciary failures, and during plan audits the U.S. Department of Labor (DOL) now routinely asks for evidence of fiduciary training. In light of the potential personal liability, it is imperative that plan fiduciaries understand their responsibilities and adhere to the standards of conduct that apply to them. The latest white paper,  Fiduciary Roles and Responsibilities Under ERISA Defined Contribution Retirement Plans , presents an overview of Employee Retirement Income Security Act (ERISA) and DOL requirements for plan fiduciaries and others with direct responsibility for retirement plans. “It is important for plan fiduciaries to be aware of what their responsibilities are regarding plan oversight—not only because of their obligations to plan participants but because of the personal liability they take on ...

Approximately one-third of eligible workers do not participate in their employer-sponsored defined contribution plans, such as ERISA 403(b) and 401(k) plans. Research suggests that almost all of these workers would choose to remain participants if they were automatically enrolled. The increased savings would significantly improve their retirement security and may result in improved workplace satisfaction. Some employers have adopted automatic enrollment plans and many more are interested, but the fact that they are potentially liable for investment losses that may occur in such plans has been a major deterrent to wider adoption of this plan design. The Pension Protection Act (PPA) of 2006 removes several impediments from automatic enrollment plans. A key provision of the PPA is amending the Employee Retirement Income Security Act (ERISA) to provide a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of parti...

To continue from our previous installment, understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. If you answer “no” to any of the following questions, you may not be complying with federal regulations. 6. Are you prepared to monitor your plan’s service providers? You should create and follow a review process at predetermined intervals to evaluate whether the current service provider is meeting your plan’s needs. This review should take into consideration the provider’s performance, reports, notices, fees, questions and follow-up. The review should include asking the plan’s service providers about policies and practices, ensuring that plan records are properly maintained and following up on participant complaints. The review process should be documented, and when using an internal administrative committee, you should educate committee members on their roles and responsibilities. 7. Have you identified parties-in-inte...

Understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. If you answer “no” to any of the following questions, you may not be complying with federal regulations. Have you identified your plan fiduciaries, and are they clear about the extent of their fiduciary responsibilities? ERISA defines a retirement plan fiduciary as a person or entity that does any of the following with respect to a retirement plan: Exercises discretionary control or authority over the management of the plan or its assets; Provides investment advice or manages the plan assets for a fee; Has discretionary responsibility in the administration of the plan; and Is specifically identified in the written plan documents as a fiduciary. Fiduciary responsibilities include: Acting solely in the interest of plan participants and their beneficiaries, and with the exclusive purpose of providing benefits to them and paying plan expenses; Carrying out their duties p...

On April 4, 2014, the IRS issued  Notice 2014-19  which provides additional guidance on how qualified retirement plans should treat the marriages of same-sex couples following the June 26, 2013 Supreme Court’s ruling in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA) that barred same-sex couples from being treated as married under federal law. Subsequent to the Windsor decision, the IRS issued  Revenue Ruling 2013-17  which stated that a couple would be considered married for federal tax purposes if their marriage certificate was issued by a jurisdiction having the legal authority to sanction marriages. Moreover, once married, the IRS would consider the couple to be married, even if domiciled in a state that does not recognize same-sex marriages. Notice 2014-19 provides guidance on how to comply with the provisions of the Revenue Ruling. Specifically, the Notice provides guidance on the following: Plan o...

HANYS Benefit Services wants to help you stay compliant in 2014 with our  2014 Compliance Calendar . Compliance is just one of many services HBS provides, including Plan Design,Plan Provider Management, and Co-Fiduciary Services. If you have any questions regarding compliance requirements or their application to your plan, contact us at (800) 388-1963 or at hbs@ hanys.org .

HANYS Benefit Services’ Ten New Year’s Resolutions for Plan Fiduciaries: 1) Keep all plan documents and related records. HANYS Benefit Services recommends that you review the most recent version of your plan documents. Documents are often misplaced as human resource personnel change and computer systems are upgraded. Complete a document checklist to make sure that all applicable documents are available and maintained. These include the Internal Revenue Service determination letter, plan amendments and notices, automatic enrollment notifications, and the summary annual report. Service agreements and vendor contracts should be reviewed periodically to ensure all required services are being provided and agreed upon. Service agreements, such as the plan document, should be kept in both electronic and paper form. 2) Review ERISA bond and fiduciary liability insurance. ERISA-covered retirement plans must maintain an ERISA bond to protect assets from theft and fraud. Maintain written proof of...