Top Five New Year’s Resolutions for Retirement Plan Fiduciaries

New Year's Resolutions, Retirement Plan Fiduciaries, Financial Wellness, Service Providers, Prohibited Transactions,We always hear the same resolutions when the new year rolls in: lose weight, get organized, travel more, etc. Resolutions for fiduciaries are not something you read about every day, which is why we are bringing you the top five resolutions to become a better plan fiduciary in 2016.

  1. Providing Information in Participant-Directed Plans.¹ When plans allow participants to direct their investments, fiduciaries need to take steps to regularly make participants aware of their rights and responsibilities under the plan related to directing their investments. This includes providing plan and investment-related information, including information about fees and expenses, that participants need to make informed decisions about the management of their individual accounts. Participants must receive the information before they can first direct their investment in the plan and annually thereafter. The investment-related information needs to be presented in a format, such as a chart, that allows for a comparison among the plan’s investment options.
  1. Be Educated on Prohibited Transactions.¹ Who is prohibited from doing business with the plan? Prohibited parties (called parties in interest) include the employer, the union, plan fiduciaries, service providers, and statutorily defined owners, officers, and relatives of parties in interest.

Some of the prohibited transactions are:

  • A sale, exchange, or lease between the plan and party in interest;
  • Lending money or other extension of credit between the plan and party in interest; and
  • Furnishing goods, services, or facilities between the plan and party in interest.

Other prohibitions relate solely to fiduciaries who use the plan’s assets in their own interest or who act on both sides of a transaction involving a plan. Fiduciaries cannot receive money or any other consideration for their personal account from any party doing business with the plan related to that business.

  1. Monitoring Your Service Providers.¹ An employer should establish and follow a formal review process at reasonable intervals to decide if it wants to continue using the current service providers or look for replacements. When monitoring service providers, actions to ensure they are performing the agreed-upon services include:
  • Evaluating any notices received from the service provider about possible changes to their compensation and the other information they provided when hired (or when the contract or arrangement was renewed);
  • Reviewing the service providers’ performance;
  • Reading any reports they provide;
  • Checking actual fees charged;
  • Asking about policies and practices (such as trading, investment turnover, and proxy voting); and
  • Following up on participant complaints.
  1. Review and Monitor Plan Expenses and Fees.¹ Fiduciaries should ensure that all required fee disclosures are made timely and monitor fees on a regular basis. Fiduciaries should establish a policy for ongoing plan expense and fee monitoring and benchmarking. Also, as necessary, disclose plan fees to participants.
  1. Adopt a Financial Wellness Program. These programs optimize employee participation and action through engaging group and individual guidance. Financial Wellness looks beyond a participant’s retirement plan and provides an individualized blueprint that summarizes goals, objectives and identifies action items to create a well-rounded financial picture.

Final Words of Wisdom for 2015¹: Being a fiduciary brings with it many responsibilities as well as potential liability. A fiduciary who does not follow the basic standards of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions. It’s important for all fiduciaries to understand their fiduciary obligations and the steps they can take to limit their exposure.

¹ dol.gov/ebsa. Meeting Your Fiduciary Responsibilities.


The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. Any decision to invest according to investment advice provided by NFP Retirement should be made after conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment. Securities may be offered through NFP Advisor Services, LLC (NFPAS), member FINRA/SIPC. Investment Advisory Services may be offered through NFP Retirement. NFPAS is affiliated with NFP Retirement Inc. To remove yourself from this list, or to add a colleague, email us at retirementinfo@nfp.com or call (949) 460-9898. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax advisor, investment professional or insurance agent. NFPR-2015-2 ACR#135123 01/15