Just when you thought it was safe to put your 401(k) plan in the file cabinet, the Department of Labor (DOL) and ERISA have created a whole new set of obligations for you to manage! As a plan sponsor for a 401(k) Plan, it is important to take note about the impending “Perfect Storm” in 401(k) compliance, ERISA Sect. 408(b)(2).
This new legislation takes effect for plan years beginning January 1, 2012 and employers are required to be in compliance by August 31, 2012. Under this onerous law, plan sponsors and fiduciaries have 3 primary requirements relative to understanding and communicating plan costs to employees. This obligation as well as other plan design requirements under the law will be ongoing throughout the life of the plan. The burden for compliance is placed squarely on the back of employers. Simultaneously, the DOL has redoubled their efforts to audit 401k plans in the hunt for violations and sanctions.
In addition to a number of more subtle plan design and compliance requirements, the essence of this new law is that plan sponsors will be responsible for the following functions on a periodic basis:
ü Plan Sponsors/Fiduciaries must identify all plan costs and investment expenses as well as establish a clear understanding of what services each cost represents.
ü Plan Sponsors/Fiduciaries must assure that all the plan costs are reasonable and competitive in the marketplace.
ü Plan Sponsors/Fiduciaries must communicate all plan costs and investment expenses to their plan participants.
To learn more, our firm will be hosting a Webinar on March 15, 2012. We have invited an expert from the Department of Labor to share with employers the issues they will face regarding compliance and disclosure requirements. Information about the Webinar can be found on our website under the Events sections at www.ipswichfinancial.com. Or contact our office at 978.777.6554 to register.