The Year of the Fiduciary – June 2011
Duck hunting season is open for the DOL
“You are scaring me,” is a recent quote from a prospective plan administrator, after
explaining exactly what her responsibilities are as a plan fiduciary.
While it is not our intention to “scare” any plan administrator, it is our intention to make
you aware of the gravity of your responsibility both to the plan and its participants under
One only has to look at the most recent Department of Labor report and Obama
administration for clues as to how the landscape is changing. The DOL has recently
stated that 77% of 401(k) plans are noncompliant “in some form.” Realizing the
importance of this and knowing how unprepared most employees are for retirement, the
administration has added 997 employees to the DOL payroll with 70% of those added to
the enforcement division. Adding fuel to this fire, the IRS Employer Plan Division
disclosed at the end of 2010 its list of “plan sponsor audit targets,” and guess who is on
the list – small business owners. LCM Capital Management interprets this as anything
less than 500 employees. If you weren’t worried before. . .
We appropriately named 2011 “The Year of the Fiduciary.” After reading this or any of
our previous writings, you realize the importance of working with an actual fiduciary and
not someone who pretends to be one. Consider the case of Phones Plus, Inc v. Hartford
Financial Services. In this case the plan sponsor alleged that Hartford and its holding
company parent had breached their fiduciary duties as a result of revenue sharing
arrangements that Hartford entered into with the various mutual fund companies.
Hartford moved for dismissal on the grounds that it was NOT a fiduciary.
Just because it walks like a duck and quacks like a duck, when it comes to plan sponsors
working with a fiduciary, make sure it is a duck.
Email LCM Capital Management today at firstname.lastname@example.org for your free plan
analysis and take the fear out of being a fiduciary.
Source: LCM Capital Management – our Retirement Plan and Wealth Management expert.