A new study has revealed that the majority of 401k plan participants in small businesses are paying hidden fees. The impact to retirement savings is significant. Regulatory efforts have been stepped up. Here is what plan sponsors need to know and do now.
Are You Paying Hidden Fees?
As a small business owner sponsoring a retirement plan, it’s very likely that you—and all the participants—are paying hidden fees.The recent study conducted by Employee Fiduciary LLC found that three out of every four small businesses are being charged hidden fees for their 401k plans. The cost to plan participants averages $228 per year. As 401k Specialist reports:
When factoring in compound interest, this can result in hundreds of thousands of dollars in lost returns over several decades of retirement saving,
“These hidden 401k fees are predatory and unacceptable,” Eric Droblyen, President and CEO of Mobile, Ala.-based Employee Fiduciary, said in a statement. “We are on the verge of a retirement crisis. More than half of working-age households are at risk of having inadequate retirement savings, and these hidden fees are a big reason why…..If you ask us, that just isn’t fair.”
With a fiduciary responsibility to ensure that the plan functions in the best interests of participants, plan sponsors need to act in accordance with the US Department of Labor protocols for choosing a service provider, assessing the fees and monitoring the services. In monitoring your plan fees, be sure to also communicate about the fees—and your review process—with your plan participants. Remember as well to follow up on complaints from plan participants in a timely manner.
Unfortunately, there’s no guarantee that as a plan sponsor you won’t face personal exposure for breach of fiduciary duty, especially with the rise of ERISA lawsuits targeting small businesses. You don’t have to take chances though. 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 quickly help you obtain fiduciary liability insurance now: Fiduciary Liability for Plan Sponsors Here.
Keep Up With Cybersecurity Too!
Another area for your increased diligence as a retirement plan fiduciary is cybersecurity. Now that the DOL has released guidance on cybersecurity for plan sponsors, it’s critical to act accordingly. The guidance includes tips for hiring a service provider, cybersecurity program best practices and online security tips.
Survey data indicates that small business owners significantly underestimate digital security risks—and are unprepared and unprotected for data breaches. The results are costly—and frequently devestating. Don’t wait for disaster to strike, though. Colonial Surety’s affordable Cyber Liability insurance provides a dedicated team of experts who assist at every stage of incident investigation and response in the event of a breach. Carefully vetted forensic and legal experts establish what’s been compromised, assess responsibility and notify impacted individuals. As needed, call center support, credit and identity monitoring is provided— even public relations experts. Liability protection in the event of covered lawsuits or regulatory actions due to a data breach? Of course, that’s included too.
Save time and money with Colonial Surety’s reasonable and comprehensive packages for plan sponsors, which 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 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.