401ks,  Return on Investment

Fiduciary or Not?

As a business owner, if you offer a retirement plan to your employee’s you are a plan sponsor and therefore a fiduciary. Even if you hire an advisor, the Department of Labor (DOL) considers you a fiduciary. As such, you are held legally responsible for your plans compliance.

Why is your role suddenly such a big deal? In 2008, the DOL had just 100 enforcement officers to oversee roughly 485,000 plans. Retirement plans, such as 401(k)s, were rarely audited unless there was a complaint.

But after the Great Recession, it became painfully obvious retirement plans were not functioning as they were intended. The DOL has said that 77 percent of plans are not compliant with the Employee Retirement Income Securities Act (ERISA). ERISA was designed to create a supplemental income for retirees. Yet the average retiree receives between $400 – $500 a month from their plan. Not much of a supplement.

In an effort to bring plans back into compliance, the DOL hired an additional 780 officers in 2009. Their ranks have now grown to over 1,000.

With the added numbers, the DOL has begun performing compliance audits and issuing fines. Fines reached $1.36 billion in 2009 and $1.69 billion in 2010. Who received these fines? Fiduciaries and the companies they represent.

What is the full extent of your fiduciary responsibilities? What actions can you take now to become complaint? How does your company’s retirement plan affect your employees?


For more information on all of these topics, I encourage you to listen to About Money, a weekly podcast and radio show. You can also follow us on Facebook and Twitter for blog updates, podcast news, and more!

I want to hear your opinions; please leave a comment below and let me know your thoughts.


Leave a Reply

Your email address will not be published. Required fields are marked *