Lawyer Up? Really?

Are you liable for the decisions on your retirement plan?  Even if you’re a small employer? Whether you know it or not, and my guess is that you do not, there has been quite a bit of news recently about retirement plan fees and fiduciary liability.  The Supreme Court made it quite clear (in a unanimous decision) that employers need to protect the interests of their employees.

This is getting serious.  I have seen a lot of scare tactics over the years from consultants, advisers, and other industry practitioners on the fiduciary liability of plan sponsors.  Plan sponsors should look past these ridiculous tactics and simply realize that excuses for unnecessary plan fees won’t work much longer. Employers of all size can have much lower cost plans with direct payment arrangements and employer friendly contracts.

As a smaller employer, take the responsibility of managing your plan seriously.  Review your plan more frequently than once every 7 to 10 years.  Make sure that your costs are, in fact, reasonable. Take the following steps and your plan will be a lot better – and you will be a lot better protected:       1)  Eliminate all revenue sharing and other unnecessary fees (insurance costs, commissions, sub T-A fees, etc.); 2)  pay flat fees for your advisory and record keeping services; and 3) use primarily low-cost index funds.

Taking these three steps will be a huge improvement for your plan.  These are the big ones.  There are some additional steps you can take as well, but once you get on board with these, you are on your way to having a great plan with much lower than reasonable costs.

Of course, there is always

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