OUR THOUGHTS ON:

401(k) Plan Review: It's a New Year...Start with the Basics

Wealth Management

By Kyle Zeller

Now that the holidays are over and we are all back into the swing of things, now might be a good time to review your retirement plan before it goes on the backburner (again). Another more compelling reason, however, begins simply with a date in mind: July 16, 2011. This is the date that the Department of Labor’s 408(b)(2) rules will go into effect. As a reminder, these new rules require registered representatives, investment advisers and others working with 401(k) plan sponsors to provide a detailed overview of their current services and the compensation received for those services. This type of transparency will be beneficial for plan sponsors assessing their plan’s current fees, but will also be a major step forward in making an apples-to-apples comparison when looking at other providers and benchmarks. These requirements will have a profound effect on service providers and should lead to significant changes in current disclosure practices.

While the 408(b)(2) rules will certainly impact service providers, plan sponsors should not wait until July to begin to review all aspects of their plans. A full plan review should already be common practice and should include such elements as employee participation, education and advice being provided. Does the plan have an Investment Policy statement that clearly defines how investments are chosen, reviewed and removed from the menu? Is automatic enrollment being utilized? What are the costs/fees? These are just a few of the items your service provider should be addressing on a consistent and regular basis.

As providers brace for new disclosure regulations, now is as good a time as any to dig into your own plan and find out exactly what you are paying for.

For more information on how you can prepare for these new regulations, contact Kyle Zeller at (614) 586-7263 or kzeller@schneiderdowns.com, or Jeff Acheson at (614) 586-7259 or jacheson@schneiderdowns.com.

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Schneider Downs provides accountingtax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH. 

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

 

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