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Dept. of Labor on the Watch for Employees Money! Boston Company and Officers ordered to restore nearly $73,000 in misused funds to company 401(k) plan to resolve lawsuit!
Employers beware. Do I have your attention? For any of you out there that are in charge with the timely submission of your employees 401k money, this story should grab your attention. Want to know two (2) of the easiest ways to bring the "wrath of Uncle Sam" to your company headquarters? I am talking about attention that you don't want. The first way is to side track your employees hard earned 401k money into other company needs or perhaps your own personal off shore checking account. The second most predominant attention getter is to delay longer then normal your deferrals to your 401k vendor in a timely manner. Both of these are a sure way to get the Feds as guest in your office foaming at the bit to review your 401k files. They are typically not the best office guests to have over for coffee and donuts. And, it will make for a very unpleasant day.
We visit with employers throughout Oklahoma all the time and our visit reveals the vast majority of 401k plan sponsors take the responsibility of sending in their employees money to their 401k vendor in a timely and expedient manner seriously. Though the following story spells out what one Boston company did not do properly with their employees hard earned 401k deferrals.
Boston -
A federal judge has ordered G. Conway Inc. of Boston and corporate officers Gerard D. Conway and Robert Conway to repay $72,803 to the company's 401(k) plan to resolve a lawsuit filed by the U.S. Department of Labor that alleged violations of the Employee Retirement Income Security Act (ERISA).
The suit, filed in the U.S. District Court for the District of Massachusetts, alleged that the defendants failed to forward to the plan employee contributions withheld from employees' paychecks between April 23, 2005, and May 12, 2007. Instead, the defendants allegedly used the withheld employee contributions to satisfy the obligations of the company.
The G. Conway Inc. 401(k) and Profit Sharing Plan provides retirement benefits for company employees. The company is no longer in business. The Labor Department's Employee Benefits Security Administration's (EBSA) Boston Regional Office investigated the case.
James Benages, regional director for EBSA's Boston office, said, "These defendants failed to discharge their fiduciary duties to the plan and its participants. The assets of employee benefit plans are to be used for the sole benefit of plan participants and beneficiaries, not for the benefit of the company that sponsors the plan."
The consent judgment obtained by the Labor Department orders the defendants to pay the restitution, properly distribute the assets of the plan to plan participants and beneficiaries, and terminate the plan. Gerard D. Conway also is permanently prohibited from serving as a fiduciary to any ERISA-covered plan.
Employers and workers can reach EBSA at 617.565.9600 or toll-free at 866.444.3272 for help with problems relating to private sector retirement and health plans. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at www.dol.gov/ebsa.
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| Turkey Facts For Thanksgiving!
And, since our national pass time of eating lots of turkey, watching too much TV and football and sleeping on the couch is just around the corner, we thought we would dig up some interesting facts to share around the holiday table. Happy Thanksgiving Oklahoma and the rest of the nation!
According to the National Turkey Foundation we in America are going to eat a lot of Turkey this year. 46 million turkeys will be consumed. Goble-Goble-Goble!
How many turkeys are raised in the United States?
More than 271 million turkeys were raised in the United States in 2007 and the same is expected for 2008.
How much does it cost to raise a turkey?
The cost of raising a turkey involves many factors. Fixed costs include buildings, equipment and interest on loans while variable costs are labor, feed and poults. Feed ingredients account for about 2/3 of the cost of raising a turkey. Geographic location, financial situation, farm size and production efficiency all contribute to cost differences in turkey production.
Great Recipes! Go to the National Turkey Federation web site for some tasty ideas to make your holiday table a winner!
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Did This Bloomberg.com Video News Story About Hidden 401k Fees Mention Your 401k Vendor?
More then ever, employers in Oklahoma and around the nation are seriously looking at their 401k plan fees both revealed and the ones 401k vendors don't want you to know about. The reason? When the market is down, this is the time employers should be making changes or asking their 401k provider to lower these high fees that affect their employees retirement balance.
At Ok401k we have seen many great news reports from the media that educate employers about hidden insurance or mutual fund company fees. For the first time one of America' s leading business media reporters have finally got the hidden 401k fee game right. Click on the link below to access this stunning report on how your employees may be paying more then they deserve to invest in your 401k plan at work.
What is the next step? If you supervise your 401k plan, you have a fiduciary responsibility to be aware of these fees. Why? The word "fiduciary" means simply that you are responsible for other people's money. And, that means specifically your employees 401k money. Your employees are relying upon you to get them the best bang for their investment buck. We can help you. At Ok401k we have a unique comparison program that reveals these hidden fees in an easy to understand and colorful report. Call us at (405) 603 4986 for your free review. Terrence Morgan, AIF President
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| The Oklahoma Employers 401k Bill of Rights. (What your agent and 401k vendor owe you.)
The Employee Retirement Income Security Act (ERISA) requires that fiduciaries of employee benefit plans (that is you the employer) administer and manage your 401k plan prudently and in the interest of the participants and beneficiaries. In carrying out these responsibilities, plan fiduciaries often rely heavily on professionally trained 401k advisors like Ok401k for help. A recent report by the staff of the U.S. Securities and Exchange Commission (SEC) released in May 2005, however, raise serious questions concerning whether some insurance agents, stockbrokers and consultants are fully disclosing potential conflicts of interest that may affect the objectivity of the advice they are providing to their pension plan clients. For example, a stockbroker or insurance agent and bank representative may have their own proprietary funds they want to sell inside your 401k plan. Obviously these 401k vendors selling agents may be able to make more money selling their own proprietary funds inside your plan.
The gold standard in the future used by quality employers when screening 401k advisors is to hire an Investment Advisor Representative (IAR) who will sign an agreement stating they will be a co-fiduciary on your 401k plan. Under the Investment Advisers Act of 1940 (Advisers Act), an investment adviser representative providing consulting services has a fiduciary duty to provide dis-interested advice and disclose any material conflicts of interest to their clients.
Ok401k meets regularly with potential clients. We are always amazed about the many groups we meet who seem unaware of what their basic fundamental fiduciary responsibilities are. Your 401k mutual fund, insurance company and/or bank is a vendor. Vendor's always need supervision. If you don't have the professional training to supervise your 401k, smart employers hire a fiduciary advisor to make sure their 401k vendor is giving you and your employees the best bang for your buck. Therefore, Ok401k came up with the following "Employer 401k Bill of Rights."
Your Employer 401k Bill of Rights
Article 1. The Right To Real 401k Investment Advice. As my consultant, please provide my employees with real investment advice and investment help not investment education which is as simple as handing out enrollment kits and wishing my employees good luck. My secretary and I can do that. (Investment Advisors are able to provide dis-interested investment advice to participants. We do not sell proprietary investments. There is no incentive to sell one product over another. Registered Representatives, insurance agents and stockbrokers may have another agenda. Only an Investment Advisor Representative can sign an agreement with an employer accepting co-fiduciary responsibility. Ask your advisor if they are registered with the SEC or a state securities regulator as an Investment Advisor Representative and will sign a co-fiduciary agreement. If so, they must provided you with all the disclosures required under those laws (including Part II of Form ADV))
Article 2. Please be unbiased in recommending 401k vendors. We don't want plans that you can make more money on certain funds or vendors. (This is a common problem in the 401k business. Agents, bank representatives and stockbrokers can make more money recommending certain investments or 401k providers).
Article 3. As my advisor, please review my 401k investments quarterly and report to me annually to satisfy my fiduciary responsibilities. Our investments must be in the top 25th percentile as compared to their peers. (Some "lazy" advisors rely upon the investment data from the 401k vendor and do not 2nd guess the 401k vendors. Good 401k advisors compile their own data and perform their own research on the 401k investments in your plan. Allowing your 401k vendor to provide you with the annual review data may result in mediocre or poor performing funds being left in your plan rather then being replaced.
Article 4. As my advisor, please provide me with an Investment Policy Statement (IPS). This IPS will enable me to have important written criteria in place that guides me and my 401k committee when reviewing our 401k plan. Not having a customized IPS is like trying to build a new sky scraper without a blue print. Don't you deserve a custom designed IPS instead of a "cookie cutter" IPS?
Article 5. The right to fair disclosure of the total cost of participation. As my advisor please provide me with a complete disclosure of all investment fees my employees incur in the 401k plan. You have a fiduciary responsibility to know exactly all fees in your 401k plan. Some advisors can get paid more in commissions by having a wrap fee on top of your investments . Insurance companies either put this fee on top of your funds or slip you in a higher share class. You have a duty to know those fees and your advisor should be forthcoming. Typically these extra wrap fees are negotiable.
Article 6. Do not allow my company and employees to be put into a 401k contract with a vendor that has surrender fees. This "a-sleep at the wheel" consulting is soooo 20th century. We at Ok401k usually see unprofessional advisors allowing their client to sign silly 401k contracts like this. If you are in a 401k vendor contract like this, fire your 401k advisor and hire a real one. Ok401k has a way to help you get out of these contracts.
The six articles up above are your basic 401k Employer Bill of rights. We have more. Call us and ask us what the other four (4) Bill of Rights are. |
From Ok401k, Inc..... Annual Notices for Calendar Year Plans
November is the time of year for calendar year plans to be thinking about whether there are participant notices that must be sent at least 30 days in advance of the next plan year (or by December 1, 2008). The types of notices due in a 401(k) plan will depend on the plan design features in each plan, and some plans will not have notice requirements. Following are some common year-end notices, any of which can be combined in a single mailing. Qualified Default Investment Alternative (QDIA) Notice: If a plan uses a QDIA for its default fund, an annual notice must be provided to all participants and beneficiaries on whose behalf investment in a QDIA may be made. Generally, this would include all participants and beneficiaries who have not made an affirmative investment election with respect to any portion of their account. Traditional 401(k) Safe-Harbor Notice:Plans that intend to take advantage of the safeharbor relief from non-discrimination testing available under IRC §401(k)(12) in 2009 must send a notice to all eligible employees. Qualified Automatic Contribution Arrangement (QACA) Notice: Automatic enrollment plans that intend to take advantage of the safe-harbor relief from non-discrimination testing available under IRC §401(k)(13) in 2009 must provide notice to all eligible employees. Eligible Automatic Contribution Arrangement (EACA) Notice: Automatic enrollment plans that intend to utilize the 90-day permissible withdrawal feature in 2009, or want to take advantage of the extension of time for making corrective distributions, must provide notice to all eligible employees. Pre-PPA Automatic Enrollment Notice: Plans that intend to utilize an automatic enrollment feature in 2009 but that are not designed as an EACA or QACA should provide an annual notice to all eligible employees. | |
| Try Ok401k's Outstanding 401k Investment Education Out For Free!
The market has dropped a lot in 2008 and I am sure your employees have let you know how they feel about their 401k portfolios? A toll free phone number or internet web site sometimes is not enough to reassure them about their long term 401k investing goals. Ok401k will provide complimentary education meetings for your employees in your break room before, during or after work. Think of it as a trial run and see just how good we are at getting employees motivated to save and invest properly.
At these fun and informative meetings, we discuss market conditions and how these short term gyrations in the market are a natural occurence. We also emphasize that your employees need to be diversified and invest for the long term. Modern Portfolio Theory, a generally accepted investment tool is Ok401k's bedrock investment philosophy.
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Terrence Morgan, AIF
Ok401k, Inc.
(405) 603 4986
Terrence Morgan, AIF is a Registered Representative of and offers securities though Wilbanks Securities, Inc. Member FINRA & SIPC. Securities activities supervised from Wilbanks Securities, Inc. at 4334 Northwest Expressway, Suite 222, Oklahoma City, Ok. 73116. (405) 842 0202. Fee based through Wilbanks Securities Advisory. Fiduciary status requires employer being given WSA ADV form Part II and a fee agreement must be established. |
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