The Employee Retirement Income Security Act of 1974 (ERISA) established rules and responsibilities for plan sponsors and companies offering retirement plans to their employees. Additional responsibilities and clarifications are established by regulations and other guidance issued periodically by the U.S. Department of Labor (DOL). Parallel provisions are often set forth in the Internal Revenue Code (IRC), related regulations, and guidance issued by the Internal Revenue Service (IRS). For simplicity’s sake, this is generally referred to as the entire governing body of law as ERISA.
Over time, there has been an increased focus on fiduciary responsibility. Why? Defined contribution plans, such as 401(k) plans that were originally designed to supplement traditional defined benefit pension plans or other employer-funded plans, have become the primary retirement savings vehicle for most Americans.
Increasingly, lawsuits are being filed on behalf of plan participants against plan fiduciaries, including the company executives responsible for oversight of 401(k) plans, to recover losses incurred by plan participants. In addition, private litigants, the DOL, state and local agencies, and the media often scrutinize plan operations. Not surprisingly, these events have drawn the focus of many plan sponsors toward issues of fiduciary responsibility and the need to reduce risk in this area.
Although the increased attention on fiduciary issues has created new complexity for plan sponsors, the end result may improve the effectiveness of defined contribution plans in creating retirement income security for an organization’s employees.
At First Bank, we believe that every plan sponsor should make an active commitment to their role as a plan fiduciary. Plan sponsors must have both an appreciation of the roles and responsibilities of a fiduciary and an understanding of the practical steps that can be taken to fulfill them. Professionals at First Bank have extensive knowledge and experience of fiduciary issues. As such, we are in a unique position to assist plan sponsors.
The plan sponsor is usually at the top of the fiduciary structure. In general, plan sponsors and plan administrators are ultimately responsible for making sure all the fiduciary jobs get done and determining what fiduciary jobs will be assigned to other parties.
While ERISA has a flexible structure for establishing the roles of plan fiduciaries, the law sets forth universal standards for their behavior. These standards are much higher than the law generally imposes on an employer’s relations with their employees. In fact, they are among the highest standards of conduct prescribed anywhere in the law. A fiduciary’s failure to perform their job up to the high level these standards require is called a breach of fiduciary responsibility and may mean personal liability for the fiduciary.
At First Bank, we do not believe this challenge is as daunting as it might at first seem. The emphasis of ERISA’s fiduciary standards is on the “how”. This means establishing appropriate procedures and processes. Since procedure and process can be managed, complying with ERISA’s fiduciary standards is a task that plan sponsors can realistically achieve.
First Bank Wealth Management can offer an independent fiduciary review of any existing plan. Our First Bank Wealth Management Advisors will implement benchmark plan provisions, assess investments and fees, and then deliver a comprehensive report to the plan sponsor. If you prefer, we can even take on the role of a fiduciary.
Allow one of our trusted First Bank Wealth Management Advisors to utilize their expertise to develop a customized wealth building approach that aligns with your organization’s needs and long-term goals. Our team will work to build a customized, cost-effective employee retirement plan that meets your business and personal objectives.
Over time, there has been an increased focus on fiduciary responsibility. Why? Defined contribution plans, such as 401(k) plans that were originally designed to supplement traditional defined benefit pension plans or other employer-funded plans, have become the primary retirement savings vehicle for most Americans.
Increasingly, lawsuits are being filed on behalf of plan participants against plan fiduciaries, including the company executives responsible for oversight of 401(k) plans, to recover losses incurred by plan participants. In addition, private litigants, the DOL, state and local agencies, and the media often scrutinize plan operations. Not surprisingly, these events have drawn the focus of many plan sponsors toward issues of fiduciary responsibility and the need to reduce risk in this area.
Although the increased attention on fiduciary issues has created new complexity for plan sponsors, the end result may improve the effectiveness of defined contribution plans in creating retirement income security for an organization’s employees.
At First Bank, we believe that every plan sponsor should make an active commitment to their role as a plan fiduciary. Plan sponsors must have both an appreciation of the roles and responsibilities of a fiduciary and an understanding of the practical steps that can be taken to fulfill them. Professionals at First Bank have extensive knowledge and experience of fiduciary issues. As such, we are in a unique position to assist plan sponsors.
The plan sponsor is usually at the top of the fiduciary structure. In general, plan sponsors and plan administrators are ultimately responsible for making sure all the fiduciary jobs get done and determining what fiduciary jobs will be assigned to other parties.
While ERISA has a flexible structure for establishing the roles of plan fiduciaries, the law sets forth universal standards for their behavior. These standards are much higher than the law generally imposes on an employer’s relations with their employees. In fact, they are among the highest standards of conduct prescribed anywhere in the law. A fiduciary’s failure to perform their job up to the high level these standards require is called a breach of fiduciary responsibility and may mean personal liability for the fiduciary.
At First Bank, we do not believe this challenge is as daunting as it might at first seem. The emphasis of ERISA’s fiduciary standards is on the “how”. This means establishing appropriate procedures and processes. Since procedure and process can be managed, complying with ERISA’s fiduciary standards is a task that plan sponsors can realistically achieve.
First Bank Wealth Management can offer an independent fiduciary review of any existing plan. Our First Bank Wealth Management Advisors will implement benchmark plan provisions, assess investments and fees, and then deliver a comprehensive report to the plan sponsor. If you prefer, we can even take on the role of a fiduciary.
Allow one of our trusted First Bank Wealth Management Advisors to utilize their expertise to develop a customized wealth building approach that aligns with your organization’s needs and long-term goals. Our team will work to build a customized, cost-effective employee retirement plan that meets your business and personal objectives.
Sheila Hester, CRSP
Senior Vice President, Director of Trust Administration
As Senior Vice President and Director of Trust Administration, Sheila has more than 30 years of Trust and Retirement Plan experience with First Bank Wealth Management. Focused on Personal and Charitable Trust Administration, Sheila works with individual clients, families, and nonprofit foundations. Sheila also provides retirement plan administration services to businesses to ensure their plans are in compliance. Find out more about Sheila.
Investment and insurance products are offered through OSAIC INSTITUTIONS, INC., Member FINRA/SIPC. Osaic Institutions and First Bank are not affiliated. Osaic Institutions does insurance business in California as Osaic Institutions Insurance Agency, CA Agency License #OH30186. Products and investment advisory services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. First Bank Wealth Management is a trade name of First Bank, and certain products and services are provided through First Bank, and its affiliates and subsidiaries. Neither Osaic Institutions or First Bank, nor any of their affiliates or financial advisors, provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Use FINRA’s BrokerCheck to learn about the professional background, certifications, licenses, and any regulatory violations or complaints for any financial advisor.
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