Fiduciary Compliance Services
The Need
Retirement Plan Fiduciaries are sometimes not aware that they are fiduciaries and that they have personal liability for each investment alternative they offer to plan participants and each choice made by each participant. There are four general duties that fiduciaries must discharge:
- Their actions must be for the exclusive purpose of providing retirement benefits to plan participants which includes defraying only reasonable expenses, and the selection and monitoring of service providers.
- Acting as a “prudent expert” with an investment course of action, sometimes referred to as an Investment Policy.
- Properly selecting, monitoring, removing and replacing a diversified selection of investment alternatives appropriate for the demographic of their plan participants.
- Administering the plan in accordance with the plan document that is consistent with ERISA.
There is more and more litigation, DOL investigations and criminal sanctions over ERISA fiduciary matters. First it was with investments offered, then over reasonable expenses and once the DOL and Congress agree on required “reasonable contracts” for service providers, fiduciaries will be held to even higher standards to develop and implement prudent fiduciary processes.
The Process
Fiduciary compliance is not an event, it is a process that must be documented. ERISA allows for a long look back “Statute of Limitations” of six years or longer, thus challenges to a fiduciary for events of say 5 years ago will require fiduciaries to prove what they did. Even finding a copy of simple things, like a signed plan document or amendment, back that far can be a challenge.
If you can’t find it, it is not documented, and if it is not documented, it never happened.
ACI’s Services
- We gather information concerning the plans administration and due diligence processes and assess any elements that might be missing.
- We help our clients identify the “named fiduciaries” and those service providers that are “functional fiduciaries.”
- We advise the fiduciaries on ways to mitigate personal liability, including ERISA 404(c) protections.
- We help Plan Committees implement better administrative and investment related prudent processes.
- We teach the Committees how to set agendas and prepare notes documenting fiduciary decisions.
- We also have a unique service that we have developed for Plan Committees and their Advisors that assembles all relevant signed documentation and due diligence to show the discharge of their fiduciary duties. We publish them on our secure portal in a single bookmarked PDF file. This becomes the single source of all documentation. At the end of the year, the current years PDF “The Fiduciary File” is frozen, and relevant items that have not changed such as plan documents are rolled into a new binder for the coming year. The Fiduciary File is added to throughout the year. Each year’s “Fiduciary File” serves as a risk management tool and a single location of reference material for Plan Committees and their Advisors.
Clients That Avail Themselves of These Services
- Those clients that have active risk management programs, including qualifying for the exceptions of ERISA 404(c) to abate personal liability when participants have a choice of investment alternatives.
- Clients who are using their plans as strategic tools to help their employees have the best opportunities to save for retirement.
- Professionally managed companies that don’t want anything to go wrong on their watch.
- Entrepreneurial clients who are nearing a business transaction and don’t want any surprises to pop up during the due diligence process.
- Clients who acquire companies either for strategic or financial purposes, and who want to be able to have good due diligence before the transaction takes place.
- Clients who acquire companies either for strategic or financial purposes and who want to be able to have good due diligence during the “Claw Back” period after the transaction has occurred.
- When a plan qualification problem surfaces. Once stung, twice shy.
ACI has been doing fiduciary compliance work for over ten years. We do not advise on investments. All our compensation is fully disclosed in accordance with proposed regulations under ERISA Section 408(b)(2) “Reasonable Contracts.”
We actively work in teams with your Registered Investment Advisor, Financial Representative, CPA and ERISA attorneys as appropriate to bring about positive outcomes for you.
