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2014: What Should Fiduciaries Expect?

A new year is underway. What does it portend for retirement plans? And what should a fiduciary do? Two recent posts offer some answers.

The Crystal Ball

Experts recently shared their visions for 2014 with our friends at Employee Benefit Adviser:

Election year torpor. This is an election year — all seats in the U.S. House of Representatives are on the ballot, as are one-third of those in the Senate, not to mention state races. Traditionally, officials are reluctant to embark on ambitious agendas during election years, which spells little progress for legislation that would benefit retirement plans, notes Neill Smith, EVP, Strategic Business Support Services at Acensus.
Social Security will loom larger. Chad Parks, CEO and founder of The Online 401(k), expects that Social Security will be in the news this year more than it has been. The Social Security and Medicare Board of Trustees has projected that the Social Security trust fund will be depleted by 2033; after that, tax income will pay only three-quarters of scheduled benefits through 2087.
Return of the match. Pete Ravani, senior retirement plan consultant for CBIZ, expects that employers that have not already reinstated their employer match will do so.
Improved participant outcomes. Ravani and Smith both believe that 2014 will bring a heightened emphasis on improving how well retirement plans perform for participants.
Redefinition of fiduciary. The U.S. Department of Labor’s Employee Benefit Security Administration plans to propose a new definition of what constitutes a fiduciary. This could affect the services fiduciaries provide, warns Smith.

Resolutions

Lisa Van Fleet and Carrie Byrnes of Bryan Cave offer their suggestions for fiduciaries in 2014:

Be prudent with procedures. When fiduciaries make decisions, they should inquire, analyze, consider alternatives, obtain any necessary help and advice and document processes, actions and the basis for each decision.
Educate and train plan fiduciaries. Doing so will help minimize fiduciary liability.
Conduct a self-audit. Conducting an audit to ensure compliance with ERISA Section 404(c) and the QDIA requirements will help ensure that a plan will be in compliance with those rules.
Review and monitor plan expenses and fees. Fiduciaries should ensure that they make all required fee disclosures on time. They also should establish a policy to monitor expenses and fees, and perform benchmarking on an ongoing basis.
Adopt, review and revise an IPS. Establish a plan investment policy statement to set guidelines and procedures for choosing, monitoring and removing investment funds and managers.
Monitor performance of investment managers and funds. Watch plan investment managers and the investments themselves to make sure they are meeting the criteria the investment policy statement sets.
Hold regular plan fiduciary meetings. Plan fiduciaries should meet at least quarterly in order to consider information regarding selection and performance and oversight of investments, investment managers and service providers.
Review plan documents. Fiduciaries should make sure that plan documents are consistent with each other and with the way they are supposed to be applied and administered.
Obtain and/or review fiduciary liability insurance policies and riders. Consider obtaining fiduciary liability insurance, which generally covers liability or loss that could result from what the fiduciary does or fails to do.
Consider retaining professionals to help perform some fiduciary tasks. Fiduciaries have to monitor plan service providers; outside professionals can assist them in doing so.

John Iekel is a writer/editor for ASPPA and its sister organizations, including NAPA Net.

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