Executive Summary
I can't say for sure what's going to happen with the implementation of the new 401(k) laws. (Click here for a summary of the new law - note the dates were pushed out 90 days from the dates shown here.)
It always pays to plan for the worst case scenario.
It could range from a bump in the road to requiring special meetings at work to calm the masses.
If you oversee your company's 401(k) and plan for "bump in the road" and get "mass hysteria' - it's not going to be pleasant. Do yourself a favor - plan for worst case scenario.
How do you prepare? Get a clear unbiased understanding of the fees and services in your current plan.
Look at what your own employees may be seeing.
Check out your plan at Brightscope. (www.brightscope.com).
Many San Diego North County plans appear in Brightscope with descriptions of "very high fees".
What's the downside of being well prepared - especially if only a few minutes effort is required by you? If it ends up being a bump in the road, you can breathe a sigh of relief and move on.
We can help. We are independent fiduciaries that do not sell products. 99% of current 401(k) plans are provided by product salespersons not fiduciaries. Prior to meeting, we'll send you a signed letter to that effect that we will not solicit your 401(k) business.
We strongly encourage you to get an unbiased third party review and not rely solely on information from the person(s) that sold you the plan. Remember, they are being paid a commission by the mutual funds and therefore are NOT unbiased no matter their sincere intent.
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Common Mistakes
Just because something is done a certain way by many doesn't mean there is not a better way. The biggest mistake we see is plan sponsors not taking a few moments to understand the difference in the status quo and a plan structure that includes an ERISA 3(38) advisor as we offer. The improvements are vast. When you move to a clean transparent plan that includes an ERISA Section 3(21) and 3(38) advisor - and eliminates 12b-1 fee paying mutual funds - then all the problems occurring inside 99% of the plans, that the DOL Regs attempt to fix just disappear. Plan sponsors that have these type of "clean" plans will have a much easier time dealing with the 2012 regulations. Your fee disclosure to plan participants is simple, clean and reasonable. We encourage all plan sponsors to seriously consider upgrading their plans now. AVOID THE 2012 MESS!!! The new regulations are attempting to "legislate quality" into 401(k) plans. Yet, "quality plans" are available today and we provide them. Avoid the mess! It's completely unnecessary to subject yourself and your participants to it. This is not a one-time event - it's every quarter, every year.
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What to Do Next
Problem Solved: Use an ERISA Section 3(21) independent advisor (RIA) that insists on bringing an ERISA Section 3(38) independent advisor (RIA) with them. They both have strict disclosure requirements built into their licensing so that complete transparency is the norm from day one. They'll be watching each other as well as the TPA, record-keeper and custodian, that are also independent. Multiple checks and balances - a fiduciary wouldn't have it any other way. Call us at 760-804-0910.
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