Dear Plan Sponsors & 401(k) Account Holders,
Whether plan sponsor or 401(k) account holder, you will be impacted by sweeping 401(k) plan changes set to hit in 2012. If you have an account at your company 401(k) - make sure your plan sponsor is aware of these issues. It's your money.
Mainstream 401(k) plans (yes including yours) use 12b-1 fees as a convenient way to compensate the various service providers in the plan. The mutual funds/401(k) providers hold influence since they are in charge of the 12b-1 revenue streams! Conflicts-of-interest galore! Through the 12b-1 fees - think "follow the money" - providers create loyalty to themselves, when the loyalty should be to the plan participants and plan sponsor. These practices are not in the best interest of plan sponsors or participants. The Dept of Labor (DOL) decided it was finally time to fix this. New rules start this year and are phased in throughout 2012.
Very few, if any, plan sponsors are aware of the panic that is occurring behind-the-scenes as the various parties - in this case the "brokers"- attempt to prepare for these landscape-changing regulations. Most are behind the curve and scrambling to prepare.
Click here to read a July 2011 "memo to brokers" document found at the American Society of Pension Professionals & Actuaries web site. This is an interesting "insiders document". A brief look is all it takes!
As you skim this document you'll see the enormity of the impact of these rules and the perception that the broker world is not prepared, far behind schedule and doesn't understand.
Avoid this major hassle by moving to a completely clean and transparent plan before transparency is MANDATED for all your participants and management to see. Far less pain for all! Your choices:
Be reactive (not recommended):
- Stay in your current plan with its 12b-1 fees etc.
- Get upset in 2012 when you find out about who has been getting paid what amount for how long in your 401(k) plan.
- Get more upset when you have to reveal these unpleasant facts to your participants and answer their probing questions.
- When the pain (or anger) is at its height call us or another provider of clean & transparent plans so you can avoid all the hoopla beyond 2012.
Be Proactive (Recommended):
- Move NOW to a clean & transparent plan - avoid the pain and frustration coming in 2012.
- In 2012, be happy because it's been a breeze for you. Your plan fees are reasonable and simple to disclose to your participants. Plan participants are happy.
- Easily inform your participants annually about their clean & transparent plan. Be proud that you went above and beyond most plan sponsors and at the same time have reduced your fiduciary liability as well as the executives to whom you report.
