401(K) PLAN FIDUCIARY BEST PRACTICES &
INDUSTRY TRENDS
Steven L. Toomey, CIMA
Principal – BKD Wealth Advisors, LLC [email protected]
TO RECEIVE CPE CREDIT
• Participate in entire webinar
• Answer polls when they are provided • If you are viewing this webinar in a group
• Complete group attendance form with • Title & date of live webinar
• Your company name
• Your printed name, signature & email address
• All group attendance sheets must be submitted to [email protected] 24 hours of live webinar • Answer polls when they are provided
• If all eligibility requirements are met, each participant will be emailed their CPE certificates within 15 business days of live webinar
ABOUT BKD BENEFIT PLAN CONSULTING
• We provide the following services to more than 750 retirement plan sponsors • Plan design • Plan implementation • Investment consulting • Serve as co-fiduciary • Employee education • Compliance testing
ISSUES FACING RETIREMENT PLAN SPONSORS
• Increased regulatory scrutiny & fiduciary responsibility • Retirement readiness
• Understanding & managing plan investments & fees
INCREASED REGULATORY SCRUTINY & FIDUCIARIES
DOL is increasingly focused on plan sponsors fulfilling their fiduciary responsibilities
•Increased number of plan audits •Hired 900 auditors
•Estimates generating $9 in fines/$1 invested in staffing •Smaller 401(k) plans
INCREASED REGULATORY SCRUTINY & FIDUCIARIES
Basic Primary Tenets of Fiduciary Responsibility under ERISA
of Loyalty to Diversify
to Incur Only Reasonable Expenses to Provide Monitoring & Oversight to Avoid Prohibited Transactions
D
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T
Y
INCREASED REGULATORY SCRUTINY & FIDUCIARIES
• DOL is focusing on the following
• Sole interest of plan participants & their beneficiaries •Plan governance
•Documentation •Reasonable expenses
INCREASED REGULATORY SCRUTINY & FIDUCIARIES
• Three ways to become a fiduciary •ERISA
•Appointed by named fiduciary
•Decision-making authority or discretionary control
HOW TO LIMIT LIABILITY FOR PLAN FIDUCIARIES*
• Know standards, law, trust provisions & your plan document • Diversify assets to specific risk/return profile of client • Prepare written investment policy statement• Use prudent experts, i.e, investment manager, & document due diligence • Work with investment consultants who serve in a co-fiduciary manner • Control & account for all expenses
• Monitor activities of “prudent experts”
• Avoid conflicts of interest & prohibited transactions *As developed by Fiduciary360 & Foundation for Fiduciary Studies
ON THE FIDUCIARY HORIZON
Retirement incomeDistributions & rollovers from 401(k) plans
Target date funds
Use & allocation of revenue sharing
PlanAdvisorTools.com, 401(k) Predictions for 2014, Fred Reish, Partner, Drinker Biddle & Reath LLP
RETIREMENT READINESS
• Is my plan properly designed? • Education vs. enrollment meetings • How to measure retirement readiness
RETIREMENT READINESS
Important for plan sponsors
DOL focus
Average annual U.S. savings rate is estimated at 4-5%
Approximately 26% of adults have no savings
More than 25% of adults
50-64 are not saving anything for retirement Median contribution amount for those
participating in a 401k plan is 7%
RETIREMENT READINESS
Plan design trends •Automatic enrollment •Automatic escalation •Automatic re-enrollment
•Use company match to encourage greater savings •Roth feature
RETIREMENT READINESS
Must provide more robust education •Segregate education sessions
•Annual retirement income assessment (gap analysis)
•Two-thirds of participants believe they can withdraw more than 6% annually
•Offer & educate
•Software aggregation tools
RETIREMENT PLAN INVESTMENT & FEE TRENDS
•Open architecture mutual fund platforms •Qualified default investments
•Investment policy statements for all plans •Investment menu simplification
RETIREMENT PLAN INVESTMENT & FEE TRENDS
Of the plans that automatically enroll participants, 69% default into Target Date Funds
•TO retirement vs. THROUGH retirement Target Date Funds
Source: Morningstar Direct, BKD Wealth Advisors
SUCCESSFUL RETIREMENT PLAN
•Plan sponsor’s fiduciary responsibilities •Simplifies
•Formal processes & procedures & goal setting •Knowledgeable, professional advisors
•100% fee transparency
•High employee participation rates
OFFICE LOCATIONS
Chicago, IL
1901 S. Meyers Road, Suite 630 Oakbrook Terrace, IL 60181 630.282.9500
Dallas, TX
14241 Dallas Parkway, Suite 1100 Dallas, TX 75254
972.702.8262
Indianapolis, IN
201 N. Illinois Street, Suite 700 Indianapolis, IN 46204 317.383.4000
Little Rock, AR
400 W. Capitol Ave., Suite 2500 Little Rock, AR 72201 501.375.5200 Kansas City, MO 1201 Walnut St., Suite 1700 Kansas City, MO 64106 816.842.1935 Springfield, MO 910 E. St. Louis St., Suite 200 Springfield, MO 65806 417.866.5822 St. Louis, MO 211 N. Broadway, Suite 600 St. Louis, MO 63102 314.231.5544 Wichita, KS
1551 N. Waterfront Parkway, Suite 300 Wichita, KS 67206
CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS
BKD,LLPis registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org.
The information in BKD webinars is presented by BKD professionals, but applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor before acting on any matters covered in these webinars.
CPE CREDIT
• CPE credit may be awarded upon verification of participant attendance
• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]
FOR MORE INFORMATION // For a complete list of our offices and subsidiaries, visit bkd.com or contact:
Steve L. Toomey, CIMA®// Principal
