As a retirement plan sponsor, you have a fiduciary responsibility to make sure that the plan fees are reasonable. In addition to the fact that it is in the best interest of everyone to avoid excessive fees while building savings, failure to adequately monitor plan fees is an ERISA breach—and a growing reason for lawsuits targeting small companies.
Are Your Plan Fees Reasonable?
Not knowing is a big problem for plan sponsors—made bigger because most participants don’t know. The difference is that as a fiduciary, you need to be confident that the plan functions in the best interests of the participants. Fees that are excessive are a hindrance to retirement saving for everyone—you too. They are also a clear violation of your fiduciary responsibilities–and a fast track to a costly and damaging ERISA lawsuit.
In monitoring your plan fees, be sure to also communicate about the fees—and your review process—with your plan participants. Keep in mind this recent survey information shared in 401k Specialist:
Over half of Americans surveyed (57%) falsely believe that they pay either no fees, or very low fees, to maintain their retirement accounts. In addition, nearly one-quarter don’t even know how much they pay in fees.
“As we have heard from our small business owner clients for some time now—and these survey results show—there is a worrisome trend in the financial services industry of investment professionals charging outsized fees,” said Scott Puritz, Managing Director of Rebalance. “Unfortunately, many hard-working Americans are not seeing the expected returns on their investments due to high fees associated with their 401k retirement savings.”
In actuality, everyone with a retirement account, such as a 401k or IRA, pays fees. According to the 21st edition of the 401k Averages Book, the average employee working for a small business pays 2.22% per year in plan costs.
Obtain Fiduciary Liability Coverage
Given the many—and expanding— responsibilities of being a plan sponsor, it’s important to be protected with fiduciary liability coverage. Even the allegation of a fiduciary breach can be costly for you and your business. There’s no need to go it alone. Colonial Surety’s fiduciary liability insurance covers your business—and you as the fiduciary—against claims of alleged or actual breaches of duty in connection with the employee retirement plan. Annual premiums total less then just an hour or two with an expert ERISA attorney if a lawsuit lands in your in-box. Colonial’s comprehensive ERISA bond packages offer plan sponsors up to $1,000,000 of fiduciary liability insurance.
Cybersecurity: Yes, That Too!
Another area for your increased diligence as a fiduciary is cybersecurity. Since the DOL has released its first ever guidance on cybersecurity for fiduciaries, it’s important for plan sponsors to act accordingly. The guidance includes tips for hiring a service provider, cybersecurity program best practices and online security tips.
Clearly, it’s a critical time for plan sponsors to step up protections for the plan—and themselves as fiduciaries. As a leading national provider of ERISA bonds, Colonial Surety Company is helping plan sponsors across the country with affordable and comprehensive packages that include Cyber Liability insurance as well as Fiduciary Liability insurance.
Importantly, Colonial Surety’s plan sponsor packages include:
- The ERISA bond required to protect the assets of the retirement plan from theft;
- Fiduciary Liabilitycoverage 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 and reasonable 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.