The scene – an unnamed company. A new CFO was appointed and installed as the 401(k) plan administrator. He replaced the 12 investment options offered before with three mutual funds. It turns out his brother managed those funds. A clear conflict of interest with regard to the 401(k) plan – enough to trigger serious legal action.
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If you’re offering health insurance to your employees, you may not know it, but there’s a “hidden” liability waiting inside your plan. It’s waiting for you, the fiduciary of the plan, to make a simple clerical mistake. When you do it will cost you $110 per day, per employee. For a 100-person firm, that’s $11,000 PER DAY!
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Many employers provide 401(k) plans and other retirement benefits to their employees for a variety of reasons from altruistic, to pure competitive necessity. What these
employers don’t realize is that the moment they set up a Plan, they’re no longer just an employer. They are a Plan Sponsor, and in the eyes of the Federal Government – a “fiduciary”.
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