Your priority as the caretaker of your employees’ retirement plan is to make sure that the employees get to enjoy the savings the plan has made possible for them.
But of course, limiting your fiduciary liability can also involve protecting your organization – and perhaps yourself – against financial penalties and even lawsuits.
To help limit liability for your organization and yourself, bear in mind the following:
While making every effort to develop a winning plan design for your employees, be aware of minimizing plan complexity, consistent with prudent conduct and oversight of the plan.
Studies suggest that having multiple record keepers can have negative impacts on both plan sponsors and participants. Multiple record keepers simply stacks up the amount of attention you need to monitor fees, investment lineups, performance and services. And for participants, having to choose among multiple record keepers appears that it may cause confusion, resulting in inaction and lower participation rates.
Additionally, studies suggested that having a large number of investment choices can overwhelm a significant percentage of employees and discourage many from participating. It can also result in individuals making allocations of their savings that are not in their interest. A well-defined, manageable selection and good information about careful decision-making are vital for inexperienced investors.
For more information, review our Plan Fiduciary Responsibility Checklist.
The Department of Labor offers extensive educational materials, as well as legislative and regulatory updates, on their website: www.dol.gov/ebsa. It is a useful resource for ongoing education.