Plan Sponsor Issues | Fiduciary Responsibility | Cincinnati 401k Audit

What Employee Benefit Plan Sponsors Need to be Talking About

Published on by Tony Lane in Benefit Plan Audits

What Employee Benefit Plan Sponsors Need to be Talking About

On June 8, 2017, Barnes Dennig and the Rinehart Sussli Group had the privilege of hosting a group of experienced professionals to present to the business community on a variety of topics that are important to employee benefit practices.  The presentations centered on the following sections:

  • Fiduciary Responsibility and Compliance
  • Changes being made to EEOC reporting
  • Economic Update
  • Best practices to get employees engaged in their 401(k) Plan
  • Is now the time to move to actively managed funds

Timothy Brown and Dawne McKenna Parrish from Thompson Hine presented on fiduciary responsibilities and compliance.  They discussed the new fiduciary duty rule, which extends fiduciary responsibility duties to those individuals that are providing investment advice for a fee or other compensation to plan participants.  This new rule was effective June 9, 2017.  Additionally, the group from Thompson Hine discussed the following topics:

  • Fiduciary responsibilities
  • Options for help in administering your plan
  • Litigation around plan fees
  • Trends in 401(k) plans
  • Common 401(k) errors/corrections

One of the key takeaways from the presentation is the importance of ensuring that fiduciary responsibilities are being documented, to show that the plan is taking the necessary steps to ensure that the plan participant’s interest are placed first.  This should include putting together an investment committee, holding regular meetings, and documenting discussion items and important decisions.  During these meetings, the committee should be looking at the fee structure of the plan and benchmarking against industry data to ensure the plan’s fees are reasonable.

Tim Ruge from Paycor provided an update on the new EEO-1 report and what employers should be doing before submitting the report.  Essentially, the new EEO-1 reporting is looking for more data, which could be used to disseminate information on the wage practices of the employer, and whether or not they are discriminatory.  The new rules are effective for 2017 with reporting by March 31, 2018.

Allen Sukholitsky from Goldman Sachs provided an interesting discussion surrounding how current political events are influencing the markets, and what we can take from the current economic trends.

Greg Poplarski from Allianz Global Investors presented on some best practices for getting employees more engaged in saving for retirement, and how to use behavioral practices to help encourage more involvement.  The presentation used Shlomo Benartzi’s book, Save More Tomorrow, as the backdrop for the presentation, and focused on six of the best practices from the book.  One of the key takeaways for the presentation was the PlanSuccess Goal (90-10-90 Goal), which presents that plans should strive to reach the following benchmarks:

  • 90% of participants should be saving for retirement
  • 10% or higher of compensation should be saved for retirement
  • 90% should let financial professions construct their portfolios

Additionally, Greg discussed how it can sometimes be beneficial to get a participant to commit to make initial deferrals or increased deferrals when a future even occurs. The most notable example being compensation changes, as the participant is not “losing” take home income.

The seminar wrapped up with a presentation from John Kutz from Legg Mason on whether the current market is indicating that plans should look to diversify index funds and move to more actively managed funds.  As the Fed looks to increase interest rates over the next few years, it may be a good time to look to funds that are actively being managed.  The reasons for this are two-fold.  First, when looking at the investment mix of the Barclays Agg, there is a significant position in government backed debt.  As the interest rates increase, these related bonds are expected to decrease in value.  Secondly, the past 6 to 7 years, passively managed funds have performed well.  This has been partially driven by a lower cost of capital, allowing companies to get financing, that might not have otherwise in a more competitive market.



If you are interested in listening to a recording of the seminar or reviewing the presentations, you can use following link to watch the whole seminar and download the slides.

If you are interested in receiving a copy of Save More Tomorrow, please contact us here (while supplies last).


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