Housekeeping Time: Tips for Plan Sponsors


You are not alone if you find yourself cloudy on your fiduciary obligations as a plan sponsor. Retirement industry executives observe that very few plan sponsors deeply understand their fiduciary duties or how to protect themselves. Experts suggest these pragmatic “housekeeping” tips.


Plan Sponsor+ Fiduciary?


ERISA expert Ary Rosenbaum urges plan sponsors to understand that in addition to being a plan sponsor, you are also a fiduciary—no matter what: “Youre not just a 401(k) plan sponsor, you are also a plan fiduciary. No matter what you do or who you hire and what they do, understand that youre almost always going to be on the hook for liability. If your third-party administrator (TPA) screws up your compliance testing or fails to prepare your Form 5500, youre still responsible no matter what. Just remember that and why you need to be organized.”


Encouragingly, Rosenbaum notes that while you can never fully eliminate your fiduciary risks, you can minimize your fiduciary liability with “good housekeeping” tips. If you have a 401(k) committee, for example, you need to follow these best practices:


When you have a 401(k) committee, its important to have meetings and its important to take minutes of these meetings. Any decisions or considerations made during these meetings must be documented. The minutes of the meetings need to be kept. Also what needs to be kept are the IPS and all plan documents, even if theyve been completely restated, as well as plan records for the past 7 years. Make sure that your financial advisors meet with you regularly during these committee meetings. Memorialize any discussion of investment decisions made.


Make sure that participant enrollment and education meetings are handled regularly, tied into the date where participants enter the plan. You also need to review your TPA and other plan providers consistently to make sure that theyre still handling the plan competently. You also need to make sure that you collect all fee disclosures provided by your plan provider, as well as benchmark those fee disclosures to make sure that the fees being charged are reasonable for the services provided.


Chore List

As you get going with your chore list, you’ll find it helpful to review The Department of Labor’s summation of fiduciary responsibilities and the related protocols for choosing a service provider, assessing the fees and monitoring the services. It’s also critical to understand and act on the Employment Benefits Security Administration’s guidance in three parts for mitigating the threat of cybercrime against retirement accounts: Tips for Hiring a Service Provider; Cybersecurity Program Best Practices; and, Online Security Tips.


Understand too, that no matter how diligently you strive to fulfill your fiduciary obligations, as a plan sponsor your personal assets are exposed, if you face allegations of a fiduciary breach. Given the rise of ERISA lawsuits targeting small businesses, why take chances?  At Colonial Surety, you can affordably obtain fiduciary liability insurance and get peace of mind that your personal assets are protected from a breach of responsibility in the administration or handling of the employee retirement plan. With an annual premium that is less than what you would pay for just one hour with an expert ERISA lawyer if disaster strikes, Colonial can help you quickly obtain fiduciary liability insurance now: Fiduciary Liability for Plan Sponsors Here.


Because cyber breaches are on the rise—and can even lead to allegations of fiduciary breaches, Colonial includes Cyber Liability coverage along with Fiduciary Liability insurance.  Armed with this protection, in the event of a cyber breach, you will have response support from a dedicated team of experts who will establish whats been compromised, assess responsibility and notify impacted individuals. As needed, call-center support, credit and identity monitoring is provided. Liability protection in the event of covered lawsuits or regulatory actions due to a data breach? Of course, thats included too.


Plan sponsors across the country are saving time and money (and sleeping better too) with Colonial Surety’s reasonably priced and comprehensive protection packages which include:


  • The ERISA bond is required to protect the assets of the retirement plan from theft; 


  • Fiduciary Liability coverage to protect you and your assets from personal liability; and, 


  • Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.


Colonial makes it so easy to secure all this coverage that you can do it now, right here: Complete Plan Sponsor Package Here.


Colonial Surety Company is in business all across the USA. We are rated “A Excellent” by A.M. Best Company and  U.S. Treasury listed.


Serving customers since 1930, Colonial Surety is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.