‹date/time›
=
;
‹#›
![3D"247F1A91-6597-4D8A-B0A3-35E3D807ACF7@hosts"](3D"master05_image002.jpg")
Sprague Israel Giles, Inc.
403(b)
Retirement Plans
New Rules, New Responsibilities
New Rules, New Responsibilities
Kerry Bandow, CFA
Sean Corry, CLU
![](3D"slide0001_image004.gif")
![](3D"slide0001_image005.gif")
Webinar, Monday, Oct 4, 2010
![](3D"slide0001_image006.gif")
![3D"247F1A91-6597-4D8A-B0A3-35E3D807ACF7@hosts"](3D"master04_image007.jpg")
Sprague Israel Giles, Inc.
www.sig-ins.com
Speaker=
s
•<=
/span>Kerry Bandow, CFA
•
Regional Pension Manager at The
Standard
• Bellevue, WA
![](3D"slide0032_image008.gif")
![](3D"slide0032_image009.gif")
![](3D"slide0032_image010.gif")
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• Kerry.Bandow@standard.com
=
•
•<=
/span>Sean Corry, President
•
Sprague Israel Giles, Inc.
• Seattle, WA
• sean.corry@SIGinsures.com
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Agenda=
•Summary of 2009 regulatory changes
•ERISA, or not
•Fiduciary duties
–Best practices
–Plan fees
–Investment selection and monitoring
–What to look for in vendors
–
![](3D"slide0031_image011.gif")
![](3D"slide0031_image012.gif")
![](3D"slide0031_image013.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Employer Retirement Plans
“Defined”
“Defined”
•Defined Contr=
ibution (DC)
• A
work-based plan, such as a 401(k) or 403(b).
–Employee chooses to participate
<=
/span>
–Employee bears the investment risk=
3;
–
•Defined Benef=
it (DB) – AKA a
“pension”
–Providing a fixed amount on a regular
basis
–The employer is responsible for inves=
ting
![](3D"slide0012_image014.gif")
![](3D"slide0012_image015.gif")
![](3D"slide0012_image016.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Most Common
Defined Contribution Plans
Defined Contribution Plans
•401(k)
–Employees may make salary deferral
contributions.
–Employers may match
contributions and/or have a profit sharing feature
=
•
•403(b)
–Now, essentially like 401(k)s.
–Available to emplo=
yees
of public educational institutions and 501(c)3 non-profit organizations
•
![](3D"slide0013_image017.gif")
![](3D"slide0013_image018.gif")
![](3D"slide0013_image019.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Recent
Regulatory Giants
•EGTRRA: Economic Growth a=
nd Tax
Relief Reconciliation Act of 2001
–Many changes to retirement plans
=
•PPA: Pension Protection Act of 2006
<=
/span>
–Made EGTRAA Permanent
–Went much further
<=
/div>
•These two affected 401(k) and 403(b)
plans
![](3D"slide0014_image020.gif")
![](3D"slide0014_image021.gif")
![](3D"slide0014_image022.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Pension
Protection Act
•Pension Protection Act of 2006
•Fourteen Titles; Over 62 Sections; 907
Pages
•Deals mostly with Defined Benefit Pla=
ns
but…
•Also contains chan=
ges to
Defined Contribution Plans and IRAs
![](3D"slide0016_image023.gif")
![](3D"slide0016_image024.gif")
![](3D"slide0016_image025.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
PPA Made EGTRRA
Permanent
Permanent
•EGTRRA, among many other things:
•Increased deferral and contribution
limits
•Created the age-50 catch-up
contributions
•Changed “top-heavy”
rules
•Expanded portability, including rollo=
vers
to IRAs
•Added Roth IRA benefits to 401(k) and
403(b)
![](3D"slide0017_image026.gif")
![](3D"slide0017_image027.gif")
![](3D"slide0017_image028.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Continued Roth 401(k) and 403(b)
•Post-tax contributions up to $16,500
(extra $5,500 for 50+)
•No required minimum distributions on
rollover to Roth IRA
•Employer match wou=
ld
apply to both traditional and Roth contributions but the total amount would =
be
considered as pre-tax
![](3D"slide0019_image029.gif")
![](3D"slide0019_image030.gif")
PPA Highlights
Effective 2009
Effective 2009
![](3D"slide0019_image031.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
PPA Highlights
Effective 2009
Effective 2009
•New Rules for 403(b)s
•Faster vesting for some plans
•Allows for “hardship
withdrawals” for plan beneficiaries
•Requires regular participant statemen=
ts
![](3D"slide0018_image032.gif")
![](3D"slide0018_image033.gif")
![](3D"slide0018_image034.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Why New
403(b) Regs?
•Issues:
•IRS audit failure rate was almost
100%
•Major concern - loans and hardship withdrawal documentation
=
•Desire was to operate 403(b) li=
ke
401(k) plans
•First comprehensive changes in 40
years
•Makes employers accept
responsibility
![](3D"slide0021_image035.gif")
![](3D"slide0021_image036.gif")
![](3D"slide0021_image037.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Written documentation required
•Include eligibilit=
y,
benefits, contribution limits, available contracts,
distributions
•Current list of
providers required (i.e., mutual funds, insurance companie=
s,
etc.)
•
![](3D"slide0022_image038.gif")
![](3D"slide0022_image039.gif")
![](3D"slide0022_image040.gif")
Standard Retirement Services
403(b)
Written Plan Document
Written Plan Document
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Salary reduction rules follow =
401(k)=
3;
•ACP testing and
eligibility under “universal availability” rules will be appl=
ied
•Deposits
– as soon as administratively feasible but no longer th=
an
15th business days
•Post-employment contributio=
ns
allowed
•Clarification of
“severance from service”
•Termination of 403(b) plans
allowed
![](3D"slide0023_image041.gif")
![](3D"slide0023_image042.gif")
![](3D"slide0023_image043.gif")
Standard Retirement Services
Other 403(b)
Requirements
Requirements
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Subject=
to
ERISA?
•Generally, 403(b) =
plans
established or maintained by tax-exempt organizations are covered by E=
RISA
Title
I.
•Governmental and church plans are
exempt.
•It is possible tha=
t some
plans offered at legal services are not subject to ERISA
•
![](3D"slide0008_image044.gif")
![](3D"slide0008_image045.gif")
![](3D"slide0008_image046.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•The employer will be deemed to have control as the plan=
sponsor, and the p=
lan
will no longer be exempt from ERISA, if:
•<=
/span> The employer exercises discr=
etion in:
–authorizing plan-to-plan transfers
![](3D"slide0005_image047.gif")
![](3D"slide0005_image048.gif")
![](3D"slide0005_image049.gif")
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–processing distributions
=
–making determinations regarding
•hardships
•qualified domestic relations orders
(QDROs),
•participant loans
<=
/div>
•other matters
Standard Retirement Services
Becoming an
ERISA Plan
ERISA Plan
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
ERISA
Advantages
•Certainty – a
clear legal framework for defining obligations and duties
=
•Control over assets
– allowing for protection and education of employees
=
•Control over the p=
lan
– Rather than the vendors defining the terms of the plan, the emplo=
yer
can have broader involvement
![](3D"slide0002_image050.gif")
![](3D"slide0002_image051.gif")
![](3D"slide0002_image052.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
ERISA
Advantages
•Pre-emption of state law
=
–Eliminates the
possibility of punitive damages, consequential damages and a jury trial=
3;
–Generally limits
reliance on oral statements that conflict with plan terms
–Employers are give=
n the
benefit of the doubt in interpreting the plan, and usually any
reasonable and consistent interpretation is upheld by courts
![](3D"slide0010_image053.gif")
![](3D"slide0010_image054.gif")
![](3D"slide0010_image055.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
ERISA
Disadvantages
–<=
/span>e.g., employers wi=
th
more than 100 employees must have the plan audited by an independent
certified public accountant each year
![](3D"slide0007_image056.gif")
![](3D"slide0007_image057.gif")
![](3D"slide0007_image058.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Employers can comp=
ly
with the new 403(b) regulations, including the requirement to have a writt=
en
plan document, without necessarily transforming a non-ERISA =
plan into an ERISA=
plan.
•However, the emplo=
yer
must continue to limit its discretion in the administration of the p=
lan.
•
![](3D"slide0011_image059.gif")
![](3D"slide0011_image060.gif")
![](3D"slide0011_image061.gif")
![](3D"slide0011_image062.gif")
![](3D"slide0011_image063.gif")
Standard Retirement Services
Avoiding ERISA
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•An employer can:
<=
/div>
–Take steps to ensu=
re the
403(b) plan keeps its tax-preferred status, and
–Provide verifying information to plan
investment providers,
–Without crossing t=
he
line and becoming a “sponsoring employer.” &=
#13;
•Difficult to remain
non-ERISA after 2009 effective date of the IRS regulations.
<=
/span>
•
![](3D"slide0039_image064.gif")
![](3D"slide0039_image065.gif")
![](3D"slide0039_image066.gif")
![](3D"slide0039_image067.gif")
![](3D"slide0039_image068.gif")
Standard Retirement Services
Avoiding ERISA
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
ERISA =
Bond
Requirement
<=
span
style=3D'font-size:75%;color:#333399;mso-color-index:5'>•Maximum required is
$500,000, but higher limits available
•<=
/span>The bond guarantee=
s that
you will be able to pay any losses up to the face amount of the bond
•<=
/span>Pays in your stead=
in
the event that you are financially unable to meet your obligations
•<=
/span>Can be purchased
separately or, if limits are on the low end, added to office pa=
ckage
policy
•<=
/span>“Crime”
coverage, not liability coverage.
Fiduciary liability is separate coverage usually added to
D&O coverage
![](3D"slide0004_image069.gif")
![](3D"slide0004_image070.gif")
![](3D"slide0004_image071.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
FYI: E=
RISA
Bond Regs
•§ 1112. Bonding, Requi=
site
Bonding of Plan Officials
–U.S. Code, TIT=
LE 29,
CHAPTER 18, SUBCHAPTER I, Subtitle B, part 4 , § 11=
12
![](3D"slide0034_image072.gif")
![](3D"slide0034_image073.gif")
![](3D"slide0034_image074.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0027_image076.gif")
![](3D"slide0027_image077.gif")
•Key Sponsor Issues:
•Fiduciary Conc=
erns
Are #1
Source: IOMA’s Annual Defined Contribution
Survey 2008
Fiduciary
Concerns
Regulatory
Compliance
Education/Communication
Appropriate
Array of Investments
Investment
Advice
Sufficiency
of Assets for Retirees
Expenses
/ Fees
Employee
Participation
Investment
Performance
![](3D"slide0027_image078.gif")
![](3D"slide0027_image079.gif")
![](3D"slide0027_image080.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
What=
217;s
a Fiduciary?
•A person who:
•Occupies a position of special trust =
and
confidence
•To whom power or
property is entrusted for the benefit of another
•Having a legal
relationship of trust and confidence to another, and
=
•Having a duty to a=
ct
primarily for the other’s benefit, e.g., a guardian,
trustee, or executor
![](3D"slide0025_image081.gif")
![](3D"slide0025_image082.gif")
![](3D"slide0025_image083.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Person=
al
Liability!
•&nbs=
p;
From the Department=
of
Labor:
“Fiduci=
aries
who do not follow the basic standards of conduct may be personally liable<=
i> to
restore any los=
ses to
the plan, or to restore any profits made through improper use of the plan’s assets
resulting from
their actions.”
![](3D"slide0030_image084.gif")
![](3D"slide0030_image085.gif")
![](3D"slide0030_image086.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Personal Liability
for Whom?
for Whom?
•Fiduciaries can be=
named
fiduciaries or “functional fiduciaries”
•Staff members can =
become
“functional fiduciaries” if they perform functions =
of a
fiduciary
•This can also incl=
ude
any Directors and Officers, whether or not they are formally named as fiducia=
ries
•Directors and Offi=
cers
can be held personally responsible for ERISA-related fiduciary claims –=
; you should have=
a fiduciary liabi=
lity
endorsement on your D&O policy!&#=
13;
![](3D"slide0036_image087.gif")
![](3D"slide0036_image088.gif")
![](3D"slide0036_image089.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Duties of a
Plan Fiduciary
Plan Fiduciary
•The DOL says Plan Fiduciaries are to:
•Act solely in the
interest of plan participants and their beneficiaries, wit=
h the
exclusive purpose of providing benefits to them;
•Carry out these duties prudently; =
3;
•Follow the plan documents;
•Diversify plan investments; and
=
•Pay only reasonable plan expenses
![](3D"slide0026_image090.gif")
![](3D"slide0026_image091.gif")
![](3D"slide0026_image092.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Ugly F=
act
Employer-sponsored retirement pl=
ans
lost nearly
$4 trillion in value during the financial crisis, leading to a range of <=
span
style=3D'position:absolute;top:54.25%;left:9.36%;width:81.46%;height:6.75%=
'>complex claims and causes of act=
ion.
![](3D"slide0035_image093.gif")
![](3D"slide0035_image094.gif")
![](3D"slide0035_image095.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Supreme
Court Case 1
•LaRue v. Dewolff , 2008
•
•Individual partici=
pants
in a defined contribution plan may sue their employer or plan fiduciary
under ERISA;
•For any impairment=
or
loss of value in the individual participant's account;
=
•That is due to a breach of a fiduciary
duty.
![](3D"slide0037_image096.gif")
![](3D"slide0037_image097.gif")
![](3D"slide0037_image098.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Supreme
Court Case 2
•Jones v. Harris, 2010
Allegation that a =
mutual
fund advisor charged excessive fees:
•The Court held that
–All relevant facts=
must
be considered in determining the reasonableness of fees
=
–Fees are too high =
when
they are so disproportionately large that they could not be the result of
arms-length bargaining
![](3D"slide0038_image099.gif")
![](3D"slide0038_image100.gif")
![](3D"slide0038_image101.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Court Case 3
Dist. Court, CD California
Dist. Court, CD California
•Tibble vs. Edison Int’l, 2010 Decision
Plan fiduciaries c=
ould
have accessed funds with lower sales charges, but did not:
•The Court held that
–The fiduciaries never pursued this=
3;
–Relying on the
investment advisor does not reduce fiduciary liability to opera=
te
prudently in the interest of plan participants
–Damages included t=
he
difference in fund costs for participant, plus the lost earn=
ings
because of the higher charges
![](3D"slide0068_image102.gif")
![](3D"slide0068_image103.gif")
![](3D"slide0068_image104.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Top 10 Fiduciary Errors
Part 1
Part 1
•Not f=
ollowing
the terms of your plan document regarding
–<=
span
lang=3DEN-GB style=3D'font-size:71%;color:#333399;mso-color-index:5'>the
administration of loan provisions or
–<=
span
lang=3DEN-GB style=3D'font-size:71%;color:#333399;mso-color-index:5'>hards=
hip
withdrawals
•Failu=
re to
follow plan document eligibility and vesting provi=
sions
•Impro=
perly
managing forfeiture accounts
•Not s=
tarting
required minimum distributions (RMD) on time
<=
/span>
•Not
depositing contributions on a timely basis &#=
13;
![](3D"slide0033_image105.gif")
![](3D"slide0033_image106.gif")
![](3D"slide0033_image107.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Top 10 Fiduciary Errors
Part 2
Part 2
•Not providing required notices to
participants (e.g., safe harbor notices or =
QDIA
notices)
• Failing to obtain
spousal consent
•Paying expenses fr=
om the
plan that are not eligible to be paid from plan
assets
•Not k=
nowing
(or making an effort to ascertain) if your plan =
fees are
reasonable
•Not s=
eeking
the help of experts when you lack the expertise to make
fiduciary decisions impacting the plan &#=
13;
![](3D"slide0042_image108.gif")
![](3D"slide0042_image109.gif")
![](3D"slide0042_image110.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Improving the
Fiduciary Process
Fiduciary Process
•Identify all plan fiduciaries
=
–Whether they are named in plan docume=
nts
or are “functional fiduciaries”
•Establish procedures
–Create a paper trail to demonstrate
compliance with ERISA rules
•Consider adopting an Investment Po=
licy
Statement
–This provides fiduciaries with guidel=
ines
or general instructions concerning types of investments and
investment management decisions
•Conduct at least annual reviews
–This helps the plan and its fiduciari=
es
stay current and in compliance
![](3D"slide0040_image111.gif")
![](3D"slide0040_image112.gif")
![](3D"slide0040_image113.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Legal obligations =
under
ERISA
•<=
/span>Decisions are to b=
e made
for the sole benefit of participants and beneficiaries
•“Fiduciaries who do not follow the basic standard=
s of
conduct
may be personally liable…”
•
•
•
•Source: U.S. Department of Labor (www.dol.gov)
•
•
![](3D"slide0065_image114.gif")
![](3D"slide0065_image115.gif")
![](3D"slide0065_image117.gif")
![](3D"slide0065_image118.gif")
Standard Retirement Services
Understanding Plan Fees
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Fees pay for
services
Participants often
benefit from
•
•
![](3D"slide0066_image119.gif")
![](3D"slide0066_image120.gif")
![](3D"slide0066_image121.gif")
![](3D"slide0066_image122.gif")
Standard Retirement Services
Nature of Fees
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0064_image123.gif")
![](3D"slide0064_image124.gif")
![](3D"slide0064_image125.gif")
![](3D"slide0064_image126.gif")
Standard Retirement Services
Nature of Fees
![](3D"slide0064_image127.gif")
Other Plan Costs
=
;
20%
Investment
<=
/b>
87.48%
Investment
Related Fees
> 80%
> 80%
Investment management fees are the largest charges assessed against
plans.
Source:
“Study of 401(k) Plan Fees and Expenses: Final Report,” Depart=
ment
of Labor, Pension and Welfare Benefits Administration.
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Analyzing the expe=
nses
of a plan is critical
•<=
/span>Plan costs affect =
bottom
line for participants
•Expenses should be in line with the level and quality o=
f services received&=
#13;
•<=
/span>Plan sponsors are
required to know who is receiving money — how much and for what
services
•
•
![](3D"slide0067_image128.gif")
![](3D"slide0067_image129.gif")
![](3D"slide0067_image130.gif")
![](3D"slide0067_image131.gif")
Standard Retirement Services
Plan Fees
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Three main categories:
•Investment management fee:
–Typically, 0.25% to 1.0% of assets in=
the
fund
•Administrative expense:
<=
/span>
–Typically, from 0.05% to 0.40% of
invested assets.
•Revenue-sharing:
<=
/div>
![](3D"slide0043_image132.gif")
![](3D"slide0043_image133.gif")
![](3D"slide0043_image134.gif")
![](3D"slide0043_image135.gif")
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–12b-1 Fees
–Shareholder Servicing Fees
–Sub-Transfer Agency Fees
<=
/span>
–Commissions
–Mutual fund rebates
Standard Retirement Services
Fees:
Investment Product Expenses
Investment Product Expenses
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•12b-1 fees:
<=
/span>
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>For marketing and
distributing the product.
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>Generally ranges b=
etween
0.25% and 1.0% of invested assets.
•Shareholder servic=
ing
fee:
–Typically used by
no–load mutual fund products, paid to TPAs for recordkeeping, ann=
ual
administration, and education services.
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>Generally up to 0.25% of invested assets=
3;
•Sub-transfer agenc=
y fees
(Sub-TA Fees):
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>For
“omnibus” accounts, instead of individual participant accounts.
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>Typically, this fee
ranges from 0.10% to 0.35% of invested assets.
•Commissions
<=
/span>
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>Paid to a broker f=
or
servicing the retirement plan account.
–<=
span
style=3D'font-size:64%;color:#333399;mso-color-index:5'>Typically 0.25% to=
1.0%
of invested assets
![](3D"slide0044_image136.gif")
![](3D"slide0044_image137.gif")
![](3D"slide0044_image138.gif")
![](3D"slide0044_image139.gif")
Types of Revenue Sharing
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Other Fees
Insurance Fees & Expenses
Insurance Fees & Expenses
Variable Annuit=
ies, proprietary and
non-proprietary:
<=
span
style=3D'font-size:75%;color:#333399;mso-color-index:5'>•Typically range be=
tween
0.4% and 1.5% of invested assets.
![](3D"slide0045_image140.gif")
![](3D"slide0045_image141.gif")
![](3D"slide0045_image142.gif")
![](3D"slide0045_image143.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Wrap Fees
•All-inclusive asset-based fee imposed on the value of t=
otal
assets
in an account.
•A catch-all that c=
an be
used to pay for plan services from compliance testing to trust reporting. &#=
13;•May cover all the
expenses with the exception of itemized fees and investment
management costs, and will be in addition to the fees the investment produ=
cts
charge.
![](3D"slide0047_image144.gif")
![](3D"slide0047_image145.gif")
![](3D"slide0047_image146.gif")
![](3D"slide0047_image147.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Parti=
cipant
Based Fees
•Calculated as a flat charge per participants in or
employees eligible for the retirement plan.
• Employee education=
and
communication
• Typically in addit=
ion to
annual base fee
• Fee ranges widely,=
from
a few dollars to $40 per participant
Traditionally, the=
se
fees pay for:
![](3D"slide0048_image148.gif")
![](3D"slide0048_image149.gif")
![](3D"slide0048_image150.gif")
![](3D"slide0048_image151.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Other
Possible Fees
•Itemized service f=
ees,
typically paid by the plan sponsor.
May include, among other service fees:
<=
/div>
–<=
span
style=3D'font-size:71%;color:#333399;mso-color-index:5'>Loans, origination=
and
maintenance
–<=
span
style=3D'font-size:71%;color:#333399;mso-color-index:5'>Form 5500
preparation
–<=
span
style=3D'font-size:71%;color:#333399;mso-color-index:5'>Distributions
=
–<=
span
style=3D'font-size:71%;color:#333399;mso-color-index:5'>Nondiscrimination
testing
•Investment Advice
Fees
•Outside Asset Fees=
•Custody Fees
<=
/span>
•Trustee Fees
![](3D"slide0049_image152.gif")
![](3D"slide0049_image153.gif")
![](3D"slide0049_image154.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
New 408(b)(2) Requirements
in July 2011
in July 2011
Relates to disclosure of fees=
3;
•Disclosure would be required for=
:
–<=
span
style=3D'font-size:86%;color:#333399;mso-color-index:5'>Services: A description of =
the
services to be provided to the plan under the arrangement.
–
–<=
span
style=3D'font-size:86%;color:#333399;mso-color-index:5'>Status: As a fiduciary or
investment advisor
–
–<=
span
style=3D'font-size:86%;color:#333399;mso-color-index:5'>Fees: Direct compensation, indirect, th=
rough
third parties, to third parties etc.
![](3D"slide0053_image155.gif")
![](3D"slide0053_image156.gif")
![](3D"slide0053_image157.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
•Choice and balance
–Managed portfolios?
–Lifestyle funds?
–Target date?
–Choice among asset classes
–Avoid participant confusion by limiting decisions
•Pay attention to fees!
![](3D"slide0052_image158.gif")
![](3D"slide0052_image159.gif")
![](3D"slide0052_image160.gif")
![](3D"slide0052_image161.gif")
Standard Retirement Services
Investment Choices
Best Practices
Best Practices
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
Investment Choices
Best Practices
Best Practices
•Minimum 404(c) relief to sponsors for “bad decisions:” =
3;
–Three distinctive options
–Quarterly changes must be allowed
–Sufficient information – meetings, website access, written information, etc=
.
![](3D"slide0003_image162.gif")
![](3D"slide0003_image163.gif")
![](3D"slide0003_image164.gif")
![](3D"slide0003_image165.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0051_image166.gif")
Vendor Selection
•Hiring a retiremen=
t plan
service provider is a serious fiduciary function
•DOL says you should
obtain information about:
–<=
span
style=3D'font-size:86%;color:#333399;mso-color-index:5'>The company’s
financial condition
–<=
span
style=3D'font-size:86%;color:#333399;mso-color-index:5'>Experience with pl=
ans of
similar size and complexity, including:
•Qualifications of
professionals
•Recent litigation =
and
enforcement actions
•Firm’s exper=
ience
& performance record
–
![](3D"slide0051_image167.gif")
![](3D"slide0051_image168.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0058_image169.gif")
•Not Shopping Around:
–The 401(k) and 403(b) marketplace is =
very
competitive and product offerings vary greatly. It pays to shop
around.
•Confusing Sales People with Consultan=
ts:
–Be careful about relying on them too =
much
for objective information
•Reducing the Buying Decision to Only
Cost:
–Cost should never be your primary
decision element, even though it is an important part of the buy=
ing
decision
•Not Asking Enough Tough Questions
![](3D"slide0058_image170.gif")
![](3D"slide0058_image171.gif")
Standard Retirement Services
Vendor Selection
–
Common Errors
Common Errors
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0057_image172.gif")
•In an RFP, ask many questions in each of these areas:&#=
13;
•Fiduciary concerns
=
–Litigation, compensation, conflicts of
interest, quality controls, data integrity and backup systems
•Investments
–Number of funds, information received,
proprietary funds, open platforms
•Services
–Enrollment support, ongoing service to
participants, recordkeeping, 5500s
•Fees
–Set-up fees, per capita fees, fees for
transactions, loans hardships, plan amendments, etc.
![](3D"slide0057_image173.gif")
![](3D"slide0057_image174.gif")
Standard Retirement Services
Vendor Selection –
Areas of Focus
Areas of Focus
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0060_image175.gif")
•What is the benefit adequacy ratio (including social security benefits)=
of
the plans that you recordkeep?
•What is the average
participation rate of the plans that you recordkeep?
•What is the average
deferral rate of the participants who are deferring into=
plans
that you recordkeep?
![](3D"slide0060_image176.gif")
![](3D"slide0060_image177.gif")
Standard Retirement Services
Vendor Selection –
Focus on Results, Not Just Features
Focus on Results, Not Just Features
Fr=
om
http://www.reish.com
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0059_image178.gif")
<=
span
style=3D'color:#333399;mso-color-index:5'>•403(b)s are now in a new regulatory world
![](3D"slide0059_image179.gif")
![](3D"slide0059_image180.gif")
Standard Retirement Services
Wrap Up
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0061_image181.gif")
<=
span
style=3D'font-size:88%;color:#333399;mso-color-index:5'>•Kerry Bandow: =
Kerry.Bandow@standard.com
<=
span
style=3D'font-size:88%;color:#333399;mso-color-index:5'>•Sean Corry:=
=
sean.corry@SIGinsures.com
<=
span
style=3D'font-size:88%;color:#333399;mso-color-index:5'>•401(k)helpcenter:<=
/span> =
http://www.401khelpcenter.com
<=
span
style=3D'font-size:75%;color:#333399;mso-color-index:5'>•DOL:
<=
span
style=3D'font-size:75%;color:#333399;mso-color-index:5'>•EBSA:
<=
span
style=3D'font-size:88%;color:#333399;mso-color-index:5'>•IRS: =
=
http://www.irs.gov/retirement/index.html
![](3D"slide0061_image182.gif")
![](3D"slide0061_image183.gif")
Standard Retirement Services
Information Source=
s
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0062_image184.gif")
•
•Questions?
![](3D"slide0062_image185.gif")
![](3D"slide0062_image186.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
Sprague Israel Giles, Inc.
www.sig-ins.com
![](3D"slide0063_image187.gif")
•
•Thank You!
![](3D"slide0063_image188.gif")
![](3D"slide0063_image189.gif")
Standard Retirement Services
Webina=
r, Oct
4, 2010
=
;
Click to edit Master text styles
Second level
Third level
Fourth level
Fifth level
=
;
‹#›
5&#=
13;
13&=
#13;
16&=
#13;
The advantages of “embracing
ERISA” are:
Certainty. Employers have a
clear legal framework for defining their obligations and duties under the
plan. In contrast, under state law, it is not clear what, if any, obligati=
ons
an employer has with respect to overseeing a 403(b) plan.
Control over assets. Employ=
ers
will have greater duties, but correspondingly also more control over the
assets of the plans. This allows employers to help protect and educate
employees regarding their 403(b) funds.
Control over the plan.
Employers can take more control over the design and administration of the
plan. This is more consistent with the general trend in the 403(b) world of
transforming the culture of 403(b) plans to be more like the culture of 40=
1(k)
plans. Rather than the vendors defining the terms of the plan, the employer
can have broader involvement.
Pre-emption of state law. T=
he
plan is no longer subject to state law. This means disgruntled employees
generally cannot bring state-law claims against the plan. This eliminates =
the
possibility of punitive damages, consequential damages and a jury trial, a=
nd
generally limits reliance on oral statements that conflict with plan terms.
Additionally, in the event of a conflict with an employee regarding the te=
rms
of a plan, employers under ERISA are given the benefit of the doubt in
interpreting the plan, and usually any reasonable and consistent
interpretation is upheld by courts.
17&=
#13;
The advantages of “embracing
ERISA” are:
Certainty. Employers have a
clear legal framework for defining their obligations and duties under the
plan. In contrast, under state law, it is not clear what, if any, obligati=
ons
an employer has with respect to overseeing a 403(b) plan.
Control over assets. Employ=
ers
will have greater duties, but correspondingly also more control over the
assets of the plans. This allows employers to help protect and educate
employees regarding their 403(b) funds.
Control over the plan.
Employers can take more control over the design and administration of the
plan. This is more consistent with the general trend in the 403(b) world of
transforming the culture of 403(b) plans to be more like the culture of 40=
1(k)
plans. Rather than the vendors defining the terms of the plan, the employer
can have broader involvement.
Pre-emption of state law. T=
he
plan is no longer subject to state law. This means disgruntled employees
generally cannot bring state-law claims against the plan. This eliminates =
the
possibility of punitive damages, consequential damages and a jury trial, a=
nd
generally limits reliance on oral statements that conflict with plan terms.
Additionally, in the event of a conflict with an employee regarding the te=
rms
of a plan, employers under ERISA are given the benefit of the doubt in
interpreting the plan, and usually any reasonable and consistent
interpretation is upheld by courts.
18&=
#13;
Greater employer duties and expenses. Empl=
oyers
will have broader duties, as defined in ERISA,
and in most cases additional plan expenses. Significantly, employers with =
more
than 100 employees must have the plan
audited by an independent certified public accountant each year. Since many 403(b) plans have been poorly
regulated, audits in the early years =
could
be more expensive than the typical plan audit.
ERISA disclosure obligations. The =
plan
must comply with the plan document requirements under ERISA, including providing a summary plan descript=
ion to
plan participants and quarterly and a=
nnual
investment and financial information.
ERISA reporting requirements. The =
plan
must comply with the annual 5500 reporting requirements
under ERISA (which now include the audit described above).
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if( ii > 0 ) {
obj=3DGetHrefObj(ii)
while ( obj && ( obj.mVis =3D=3D 0 ) && ( ii>0 ) )
obj=3DGetHrefObj(--ii)
if( ii =3D=3D 0 ) ii=3D1
GoToSldNum(ii)
}
}
function GoToFirst(){ GoToSld( GetHrefObj(1).mSldHref ) }
function GoToLast()
{
ii=3DGetSldList().mList.length
if( ii !=3D gCurSld )
GoToSld( GetHrefObj(ii).mSldHref )
}
function GoToSldNum( num )
{
if( PPTSld.event ) PPTSld.event.cancelBubble=3Dtrue
obj =3D GetHrefObj( num )
obj.mVis=3D1
gPrevSld=3DgCurSld
gCurSld =3D num;
=09
if (MHTMLPrefix !=3D "")
PPTSld.location.replace(MHTMLPrefix+RemoveFilePrefixFromHref(obj.mSldHref=
))
else
PPTSld.location.replace(obj.mSldHref)
=09
if( IsFramesMode() ) {
UpdNavPane(); UpdOtlPane(); UpdNtsPane()
}
}
function GoToSld( href )
{
if( PPTSld.event ) PPTSld.event.cancelBubble=3Dtrue
GetHrefObj( GetSldNum(href) ).mVis=3D1
if (MHTMLPrefix !=3D "")
PPTSld.location.replace(MHTMLPrefix+RemoveFilePrefixFromHref(href))
else
PPTSld.location.replace(href)
}
function SldUpdated( id )
{
if( id =3D=3D GetHrefObj(gCurSld).mSldHref ) return
gPrevSld=3DgCurSld
gCurSld=3DGetSldNum(id)
if( IsFramesMode() ) {
UpdNavPane(); UpdOtlPane(); UpdNtsPane()
}
}
function PrevSldViewed(){ GoToSld( GetHrefObj(gPrevSld).mSldHref ) }
function HasPrevSld() { return ( gIsEndShow || ( gCurSld !=3D 1 && GetHrefO=
bj( gCurSld-1 ).mVis =3D=3D 1 )||( GetCurSldNum() > 1 ) ) }
function HasNextSld() { return (GetCurSldNum() !=3D GetNumSlds()) }
function CloseWindow() {
if( HideMenu() ) return;
=09
var event =3D PPTSld.event;
if( !IsFramesMode() && event && (event.keyCode=3D=3D27 || event.keyCode=3D=
=3D32 || event.type=3D=3D"click" ) )
window.close( self );
CatchNumKeys( self, event );
}
function Unload() { gIsEndShow=3D0; }
function SetupEndShow() {
gIsEndShow=3D1;
PPTSld.document.body.scroll=3D"no";
PPTSld.document.onkeypress=3DCloseWindow;
PPTSld.document.onclick=3DCloseWindow;
PPTSld.document.oncontextmenu=3D_CM;
}
function EndShow()
{
if( IsFramesMode() ) return
if( PPTSld.event ) PPTSld.event.cancelBubble=3Dtrue
doc=3DPPTSld.document
var dir =3D doc.body.dir
if( dir !=3D "rtl" ) dir =3D "ltr";
doc.open()
doc.writeln(' 0) {
PushSldList(sldList,fEnd);
gCurSld =3D 1;
}
else
if( PPTSld.event ) PPTSld.event.cancelBubble=3Dtrue
}
function PushSldList(arr,fEnd) {
var ii =3D gSldStack.length;
gSldStack[ii] =3D new SldList(arr,gCurSld,fEnd);
GoToSld( gSldStack[ii].mList[0].mSldHref );
}
function PopSldList() {
if (gSldStack[gSldStack.length-1].fEndShow)
EndShow()
else {
gCurSld =3D gSldStack[gSldStack.length-1].mCurSld;
gSldStack[gSldStack.length-1] =3D null;
gSldStack.length--;
var sldList =3D gSldStack[gSldStack.length-1];
GoToSld( sldList.mList[gCurSld - 1].mSldHref );
}
}
var custShowList=3Dnew Array();
/*********************************************
Navigation button implementation
There are 2 types of buttons: ImgBtn, TxtBtn
implemented as function objects. They share
a similiar interface so the event handlers
can call SetActive, for example, on a button=20
object without needing to know exactly=20
what type of button it is.
**********************************************/
//----------------------------------
function ImgBtn( oId,bId,w,action )
//----------------------------------
{
var t=3Dthis
t.Perform =3D _IBP
t.SetActive =3D _IBSetA
t.SetInactive=3D _IBSetI
t.SetPressed =3D _IBSetP
t.SetDisabled=3D _IBSetD
t.Enabled =3D _IBSetE
t.ChangeIcon =3D null
t.UserAction =3D action
t.ChgState =3D _IBUI
t.mObjId =3D oId
t.mBorderId=3D bId
t.mWidth =3D w
t.mIsOn =3D t.mCurState =3D 0
}
function _IBSetA()
{
if( this.mIsOn ) {
obj=3Dthis.ChgState( gHiliteClr,gShadowClr,2 )
obj.style.posTop=3D0
}
}
function _IBSetI()
{
if( this.mIsOn ) {
obj=3Dthis.ChgState( gFaceClr,gFaceClr,1 )
obj.style.posTop=3D0=20
}
}
function _IBSetP()
{
if( this.mIsOn ) {
obj=3Dthis.ChgState( gShadowClr,gHiliteClr,2 )
obj.style.posLeft+=3D1; obj.style.posTop+=3D1
}
}
function _IBSetD()
{ =20
obj=3Dthis.ChgState( gFaceClr,gFaceClr,0 )
obj.style.posTop=3D0=20
}
function _IBSetE( state )
{
var t=3Dthis
GetObj( t.mBorderId ).style.visibility=3D"visible"
if( state !=3D t.mIsOn ) {
t.mIsOn=3Dstate
if( state )
t.SetInactive()
else
t.SetDisabled()
}
}
function _IBP()
{
var t=3Dthis
if( t.mIsOn ) {
if( t.UserAction !=3D null )
t.UserAction()
if( t.ChangeIcon ) {
obj=3DGetObj(t.mObjId)
if( t.ChangeIcon() )
obj.style.posLeft=3Dobj.style.posLeft+(t.mCurState-4)*t.mWidth
else
obj.style.posLeft=3Dobj.style.posLeft+(t.mCurState-0)*t.mWidth
}
t.SetActive()
} =20
}
function _IBUI( clr1,clr2,nextState )
{
var t=3Dthis
SetBorder( GetObj( t.mBorderId ),clr1,clr2 )
obj=3DGetObj( t.mObjId )
obj.style.posLeft=3Dobj.style.posLeft+(t.mCurState-nextState)*t.mWidth-obj=
.style.posTop
t.mCurState=3DnextState
return obj
}
//-----------------------------------------
function TxtBtn( oId,oeId,action,chkState )
//-----------------------------------------
{
var t=3Dthis
t.Perform =3D _TBP
t.SetActive =3D _TBSetA
t.SetInactive=3D _TBSetI
t.SetPressed =3D _TBSetP
t.SetDisabled=3D _TBSetD
t.SetEnabled =3D _TBSetE
t.GetState =3D chkState
t.UserAction =3D action
t.ChgState =3D _TBUI
t.mObjId =3D oId
t.m_elementsId=3D oeId
t.mIsOn =3D 1
}
function _TBSetA()
{
var t=3Dthis
if( t.mIsOn && !t.GetState() )
t.ChgState( gHiliteClr,gShadowClr,0,0 )
}
function _TBSetI()
{
var t=3Dthis
if( t.mIsOn && !t.GetState() )
t.ChgState( gFaceClr,gFaceClr,0,0 )
}
function _TBSetP()
{
if( this.mIsOn )
this.ChgState( gShadowClr,gHiliteClr,1,1 )
}
function _TBSetD()
{ =20
this.ChgState( gFaceClr,gFaceClr,0,0 )
this.mIsOn =3D 0
}
function _TBSetE()
{
var t=3Dthis
if( !t.GetState() )
t.ChgState( gFaceClr,gFaceClr,0,0 )
else
t.ChgState( gShadowClr,gHiliteClr,1,1 )
t.mIsOn =3D 1
}
function _TBP()
{
var t=3Dthis
if( t.mIsOn ) {=20
if( t.UserAction !=3D null )
t.UserAction()
if( !t.GetState )
return
if( t.GetState() )
t.SetPressed()
else
t.SetActive()
} =20
}
function _TBUI( clr1,clr2,lOffset,tOffset )
{
SetBorder( GetObj( this.mObjId ),clr1,clr2 )
Offset( GetObj( this.m_elementsId ),lOffset,tOffset )
}
function Offset( obj, top, left ){ obj.style.top=3Dtop; obj.style.left=3Dle=
ft }
function SetBorder( obj, upperLeft, lowerRight )
{
s=3Dobj.style;
s.borderStyle =3D "solid"
s.borderWidth =3D 1=20
s.borderLeftColor =3D s.borderTopColor =3D upperLeft
s.borderBottomColor=3D s.borderRightColor =3D lowerRight
}
function GetBtnObj(){ return gBtnArr[window.event.srcElement.id] }
function BtnOnOver(){ b=3DGetBtnObj(); if( b !=3D null ) b.SetActive() }
function BtnOnDown(){ b=3DGetBtnObj(); if( b !=3D null ) b.SetPressed() }
function BtnOnOut(){ b=3DGetBtnObj(); if( b !=3D null ) b.SetInactive() }
function BtnOnUp()
{
b=3DGetBtnObj()
if( b !=3D null )
b.Perform()
else
Upd()
}
function GetNtsState(){ return parent.gNtsOpen }
function GetOtlState(){ return parent.gOtlOpen }
function GetOtlTxtState(){ return parent.gOtlTxtExp }
function NtsBtnSetFlag( fVal )
{
s=3Ddocument.all.item( this.m_flagId ).style
s.display=3D"none"
if( fVal )
s.display=3D""
else
s.display=3D"none"
}
function _BSetA_Border(){ b =3D gBtnArr[this.mObjId]; if( b !=3D null ) b.S=
etActive() }
function _BSetI_Border(){ b =3D gBtnArr[this.mObjId]; if( b !=3D null ) b.S=
etInactive() }
function _BSetP_Border(){ b =3D gBtnArr[this.mObjId]; if( b !=3D null ) b.S=
etPressed() }
function _BSetA_BorderImg()
{=20
b =3D gBtnArr[this.mBorderId]=20
if( b !=3D null && this.mIsOn && !b.GetState() ) {
obj=3Dthis.ChgState( gHiliteClr,gShadowClr,2 )
obj.style.posTop=3D0
}
}
function _BSetI_BorderImg()
{=20
b =3D gBtnArr[this.mBorderId]
if( b !=3D null && this.mIsOn && !b.GetState() ) {
obj=3Dthis.ChgState( gFaceClr,gFaceClr,1 )
obj.style.posTop=3D0
}
}
var gHiliteClr=3D"THREEDHIGHLIGHT",gShadowClr=3D"THREEDSHADOW",gFaceClr=3D"=
THREEDFACE"
var gBtnArr =3D new Array()
gBtnArr["nb_otl"] =3D new TxtBtn( "nb_otl","nb_otlElem",parent.ToggleOtlPan=
e,GetOtlState )
gBtnArr["nb_otlElem"] =3D new TxtBtn( "nb_otl","nb_otlElem",parent.ToggleOt=
lPane,GetOtlState )
gBtnArr["nb_nts"] =3D new ImgBtn( "nb_nts","nb_ntsBorder",10,parent.ToggleN=
tsPane )
gBtnArr["nb_nts"].SetActive =3D _BSetA_BorderImg;
gBtnArr["nb_nts"].SetInactive =3D _BSetI_BorderImg;
gBtnArr["nb_ntsBorder"] =3D new TxtBtn( "nb_ntsBorder","nb_ntsElem",parent.=
ToggleNtsPane,GetNtsState )
gBtnArr["nb_ntsElem"] =3D new TxtBtn( "nb_ntsBorder","nb_ntsElem",parent.To=
ggleNtsPane,GetNtsState )
gBtnArr["nb_prevBorder"] =3D gBtnArr["nb_prev"]=3D new ImgBtn( "nb_prev","n=
b_prevBorder",30,parent.GoToPrevSld )
gBtnArr["nb_nextBorder"] =3D gBtnArr["nb_next"]=3D new ImgBtn( "nb_next","n=
b_nextBorder",30,parent.GoToNextSld )
gBtnArr["nb_sldshw"]=3D new ImgBtn( "nb_sldshw","nb_sldshwBorder",18,parent=
.FullScreen )
gBtnArr["nb_sldshwBorder"] =3D new TxtBtn( "nb_sldshw","nb_sldshwBorder",pa=
rent.FullScreen,null )
gBtnArr["nb_sldshwBorder"].SetActive =3D _BSetA_Border;
gBtnArr["nb_sldshwBorder"].SetInactive =3D _BSetI_Border;
gBtnArr["nb_sldshwText"] =3D new TxtBtn( "nb_sldshw","nb_sldshwText",parent=
.FullScreen,null )
gBtnArr["nb_sldshwText"].SetActive =3D _BSetA_Border;
gBtnArr["nb_sldshwText"].SetInactive =3D _BSetI_Border;
gBtnArr["nb_voice"] =3D gBtnArr["nb_voiceBorder"] =3D new ImgBtn( "nb_voice=
","nb_voiceBorder",18,parent.ToggleVNarration )
gBtnArr["nb_otlTxtBorder"] =3D gBtnArr["nb_otlTxt"]=3D new ImgBtn( "nb_otlT=
xt","nb_otlTxtBorder",23,parent.ToggleOtlText )
gBtnArr["nb_ntsBorder"].m_flagId=3D "nb_nts"
gBtnArr["nb_ntsBorder"].SetFlag =3D NtsBtnSetFlag
gBtnArr["nb_otlTxt"].ChangeIcon=3D GetOtlTxtState
/*********************************************
Context menu implementation
_CM() is the function that's hooked up to
the oncontextmenu event. Once we're asked to
show the menu, we first build it by creating
DIVs on-the-fly. Then we position it=20
within the screen area so it doesn't get
clipped.
Creating the DIVs using createElement() means
we don't have to write out any extra HTML
into the slide HTML files.
**********************************************/
var sNext=3D"Next",sPrev=3D"Previous",sEnd=3D"End Show",sFont=3D"Arial",sAr=
row=3D"Arrow",sFreeform=3D"Freeform",sRect=3D"Rectangle",sOval=3D"Oval"
function ShowMenu()
{
BuildMenu();
var doc=3DPPTSld.document.body,x=3DPPTSld.event.clientX+doc.scrollLeft,y=
=3DPPTSld.event.clientY+doc.scrollTop
m =3D PPTSld.document.all.item("ctxtmenu")
m.style.pixelLeft=3Dx
if( (x+m.scrollWidth > doc.clientWidth)&&(x-m.scrollWidth > 0) )
m.style.pixelLeft=3Dx-m.scrollWidth
m.style.pixelTop=3Dy
if( (y+m.scrollHeight > doc.clientHeight)&&(y-m.scrollHeight > 0) )
m.style.pixelTop=3Dy-m.scrollHeight
m.style.display=3D""
}
function _CM()
{
if( !parent.IsFullScrMode() ) return;
if(!PPTSld.event.ctrlKey) {
ShowMenu()
return false
} else
HideMenu()
}
function BuildMenu()
{
if( PPTSld.document.all.item("ctxtmenu") ) return
var mObj=3DCreateItem( PPTSld.document.body )
mObj.id=3D"ctxtmenu"
mObj.style.visibility=3D"hidden"
var s=3DmObj.style
s.position=3D"absolute"
s.cursor=3D"default"
s.width=3D"120px"
SetCMBorder(mObj,"menu","black")
var iObj=3DCreateItem( mObj )
SetCMBorder( iObj, "threedhighlight","threedshadow" )
iObj.style.padding=3D2
CreateMenuItem( iObj,sNext,M_GoNextSld,M_True )
CreateMenuItem( iObj,sPrev,M_GoPrevSld,M_HasPrevSld )
=09
CreateSeparator( iObj )
CreateMenuItem( iObj,sEnd,M_End,M_True )
mObj.style.visibility=3D"visible"
}
function Cancel() { window.event.cancelBubble=3Dtrue; window.event.returnVa=
lue=3Dfalse }
function Highlight() { ChangeClr("activecaption","threedhighlight") }
function Deselect() { ChangeClr("threedface","menutext") }
function Perform()
{
e=3DPPTSld.event.srcElement
if( e.type=3D=3D"menuitem" && e.IsActive() )
e.Action()
else
PPTSld.event.cancelBubble=3Dtrue
}
function ChangeClr( bg,clr )
{
e=3DPPTSld.event.srcElement
if( e.type=3D=3D"menuitem" && e.IsActive() ) {
e.style.backgroundColor=3Dbg
e.style.color=3Dclr
}
}
function M_HasPrevSld() { return( parent.HasPrevSld() ) }
function M_GoNextSld() { if( gIsEndShow ) M_End(); else GoToNextSld() }
function M_GoPrevSld() { if( gIsEndShow ) { gIsEndShow=3D0; history.back();=
PPTSld.event.cancelBubble=3Dtrue; } else GoToPrevSld() }
function M_True() { return true }
function M_End() { window.close( self ) }
function CreateMenuItem( node,text,action,eval )
{
var e=3DCreateItem( node )
e.type=3D"menuitem"
e.Action=3Daction
e.IsActive=3Deval
e.innerHTML=3Dtext
if( !e.IsActive() )
e.style.color=3D"threedshadow"
e.onclick=3DPerform
e.onmouseover=3DHighlight
e.onmouseout=3DDeselect
s=3De.style;
s.fontFamily=3DsFont
s.fontSize=3D"9pt"
s.paddingLeft=3D2
}
function CreateSeparator( node )
{
var sObj=3DCreateItem( node )
SetCMBorder(sObj,"menu","menu")
var s=3DsObj.style
s.borderTopColor=3D"threedshadow"
s.borderBottomColor=3D"threedhighlight"
s.height=3D1
s.fontSize=3D"0px"
}
function CreateItem( node )
{
var elem=3DPPTSld.document.createElement("DIV")
node.insertBefore( elem )
return elem
}
function SetCMBorder( o,ltClr,rbClr )
{
var s=3Do.style
s.backgroundColor=3D"menu"
s.borderStyle=3D"solid"
s.borderWidth=3D1
s.borderColor=3DltClr+" "+rbClr+" "+rbClr+" "+ltClr
}
------=_NextPart_01CB6AC6.61D10BF0
Content-Location: file:///C:/1ECBB113/403(b)Presentation-NewWorldofFiduciaryResponsibilities_files/fullscreen.htm
Content-Transfer-Encoding: quoted-printable
Content-Type: text/html; charset="us-ascii"
Slide 1
Fiduciary duties. The employer is subject=
to
the ERISA fiduciary duty standards. Under state law, it is unclear to what extent an employer is subjec=
t to
common law fiduciary duties. Under ER=
ISA, a
fiduciary must act in the best interests of the participants and in a prud=
ent
manner. This requires oversight of 40=
3(b)
providers for investment performance and expenses. ERISA also requires plan fiduciaries to make sure =
that
plan terms are followed. (While this is a
burden on employers, their oversight of employees' investment funds would =
tend
to help protect employees.)
Claims procedures. The plan must provide
participants with certain rights, including the right to make claims under the ERISA claims procedures. Whi=
le
this is a burden, it offers the advan=
tage
of providing a framework for dealing with disputes, and if the employer
follows the procedures, the employer's
decision regarding the dispute will usually be upheld, unless it is unreasonable.
23&=
#13;
By nearly a
two-to-one margin, Fiduciary concerns topped the list of key sponsor issues
for the next 3 years, remaining in first place from the previous year (54%=
).
NOTE: MANY
OF THE ITEMS BELOW “FIDUCIARY CONCERNS” ARE, IN FACT,
FIDUCIARY CONCERNS.
Employee e=
ducation
/communication issues, last years number three issue, was a distant
second. Regulatory complianc=
e,
only 5th in the last two
years climbed two notches to number 3 this year, while investment advice,
which was second in the last two years, fell back to number 4.
By plan si=
ze,
regulatory compliance, fiduciary concerns and sufficiency of assets for
retirees were the top issues for large plans. Small plans remain focused on fid=
uciary
issues, investment advice, and employee education.
1. Not following the terms of your plan document
regarding the administration of loan provisions (maximum amounts, repayment schedules, etc.=
) or
hardship withdrawals.
Plan documents routinely provide that hardship
distributions can only be obtained for certain very specific reasons, and =
that participants first avail themsel=
ves of
all other sources of financing before applying for hardship distributions
(these conditions often =
are
incorporated directly from the requirements of the law). Similarly,
loans are permissible from these programs only when they comply with certain standards regarding the
amount, purpose, and repayment terms.
Failure to ensure that these legal requirements ar=
e met
can, of course, most obviously result in a distribution not authorized under the terms of the plan
document—and, since these types of distributions are frequently quic=
kly
spent by participants (a=
nd thus
not readily recoverable), it can be complicated and time-consuming to set =
the
situation right. <=
b>
2. Failure to follow plan document eligibility =
and
vesting provisions &=
#13;
An employee’s rights to retirement benefits =
are
determined by the correct application of service and/or age requirements of the plan regarding
eligibility for participation, and also may be influenced by the proper
application of the plan&=
#8217;s
vesting schedule.
To properly comply with those requirements, you ne=
ed to
maintain accurate service records for all employees. If these records are incorrect, the benefits p=
rovided
may be incorrect—either in excess of what is permissible or less than
what was due to the part=
icipant.
Note that the failure to properly follow the plan’s provisions can c=
ause
the plan to lose its qua=
lified
status.
The plan document serves as the foundation for plan
operations; it is, quite simply, the operating manual for your program. Sometimes, particularl=
y if you
are relying on a document that has been prepared by a third-party service =
provider, certain “gaps” =
can
emerge between what the document allows and how the plan is actually
administered. As a=
result,
it is a good idea to conduct a document/process “audit” every
couple of years—don’t assume that “the way we’ve always done things”=
is
supported by the legal document governing your plan.
3. Improperly managing forfeiture accounts =
Many defined contribution plans require participan=
ts to
complete a period of service before becoming fully vested in matching or non-elective employer
contributions, and when a participant leaves the play before they are fully
vested, their unvested a=
ccount
balance may be forfeited. Some plan administrators place these forfeited
amounts into a plan susp=
ense
account, allowing them to accumulate over several years. However, the
Internal Revenue Code does not allow
this practice. Forfeitures must be used or allocated in the plan year
incurred.
Revenue Ruling 80-155 states that a defined contri=
bution
plan will not be qualified unless all funds are allocated to participants’ accounts in accor=
dance
with a definite formula defined in the plan, and the IRS notes that this w=
ould
preclude a plan from car=
rying
over plan forfeitures to subsequent plan years, as doing so would defy the
rule requiring all monie=
s in a
defined contribution plan to be allocated annually to plan participants.&n=
bsp;
The plan document’s terms should
have provisions detailing how and when a plan will exhaust plan forfeiture=
s.
4. Not starting required minimum distributions =
(RMD)
on time
=
A minimum payment must be made to the participant =
by the
required beginning date (RBD) and for each following year. Normally, the RBD for a participant wh=
o is
not a 5% owner is April 1 following the end of the calendar year in which the latter of two events occurs=
: either
the participant reaches age 70½ or the participant retires (for 5%
owners, the RBD is April=
1
following the end of the calendar year in which they attain age 70½
regardless of their retirement date).
Plan sponsors often discover that required minimum
payments either have not been paid timely or at all, especially when a non-5% owner continues working=
after
reaching age 70½. Failure to follow the minimum payment rules as written in the plan document can lead=
to the
loss of the plan’s tax-qualified status. If participants or
beneficiaries do not rec=
eive
their minimum distribution on time, they (not the plan) are subject to a 5=
0%
additional tax on the underpayment.
5. Not depositing contributions on a timely bas=
is
The legal requirements for depositing contribution=
s to
the plan are perhaps the most widely misunderstood elements of plan administration. A delay in
contribution deposits is also one of the most common flags that an employe=
r is
in financial troubleR=
12;and
that the Labor Department is likely to investigate.
=
;
Note that the law requires that participant
contributions be deposited in the plan as soon as it is reasonably possibl=
e to
segregate them from the
company’s assets, but no later than the 15th business day of the mon=
th
following the payday. If
employers can reasonably make the deposits sooner, they need to do so.&nbs=
p;
Many have read the worst-case situation (the 15th business day of the month following) to =
be the
legal requirement. It is not.
6. Not providing required notices to participan=
ts
(e.g., safe harbor notices or QDIA notices).
The law provides plan fiduciaries with certain
protections conditioned on the timely provision of notices deemed <=
span
lang=3DEN-GB style=3D'font-size:67%'>sufficient to alert participants to t=
heir
rights and the obligations of the plan fiduciaries. This holds true =
with
so-called “safe
harbor” plan designs as well as the selection of qualified default
investment alternatives (QDIAs), or the implementation of automatic enrollment, where the
participant could opt out of deferrals, select a different deferral amount, or select another investment =
option.
While the implications of failing to provide a tim=
ely
notice vary depending on the purpose of the notice, generally speaking, a failure to provide the no=
tice
invalidates the protections afforded the fiduciary.
7. Failing to obtain spousal consent.
The IRS notes that a common plan mistake submitted=
for
correction under the Voluntary Correction Program (VCP) is the distribution to a participant of a
benefit in a form other than the required QJSA (e.g., a single lump sum)
without securing proper =
consent
from the spouse. This often happens when the sponsor’s human resourc=
es
accounting system incorr=
ectly
classifies a participant as not married (or when the participant was not
married at one point and subsequently got married—or remarried). The failure=
to
provide proper spousal consent is an operational qualification mistake tha=
t would cause the plan to lose its
tax-qualified status.
8. Paying expenses from the plan that are not
eligible to be paid from plan assets.
Plan sponsors are frequently interested in what ex=
penses
can be paid from plan assets. The first step in that determination involves making sure th=
at the
plan document allows the payment of any expenses from plan assets. &=
#13;
Assuming that the plan allows it, the Department of
Labor has divided plan expenses into two types: so-called “settlor <=
/span>expenses,” which must be borne =
by the
employer; and administrative expenses, which—if they are
reasonable—may be =
paid
from plan assets. In general, settlor expenses include the cost of a=
ny
services provided to establish, terminate, or design the plan. These are the types of serv=
ices
that generally are seen as benefiting the employer, rather than the plan beneficiaries.
Administrative expenses include fees and costs
associated with things like amending the plan to keep it in compliance with tax laws, conducting nondiscrimi=
nation
testing, performing participant recordkeeping services, or providing plan =
information to participants. <=
span
lang=3DEN-GB style=3D'font-size:67%'>
9. Not knowing (or making an effort to ascertai=
n) if
your plan fees are reasonable.
As a plan fiduciary, you have several key
responsibilities, one of which is to make sure that the fees paid by, and =
the services rendered to, the plan be
reasonable. Fulfilling that responsibility would seem to require that
you know the services th=
at are
being rendered, and that you know the fees paid for those services.
Determining that the combination is reasonable may=
seem
as much art as science, but if you do not have the answers to those two key variables, IMHO it i=
s hard
to imagine how you can satisfy your obligation as a fiduciary.
10. Not seeking the help of experts when you la=
ck the
expertise to make fiduciary decisions impacting the plan.
ERISA imposes a duty of prudence on plan fiduciari=
es
that is often referred to as one of the highest duties known to law—and for good reason. =
Those
fiduciaries must act “with the care, skill, prudence and diligence u=
nder
the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with =
such
matters would use in the=
conduct
of an enterprise of a like character and with like aims.” The
“familiar with such matters” is the sticking point for those who might otherwise be incl=
ined to
simply adopt a “do unto others as you would have others do unto
you” approach.&nbs=
p;
Similarly, those who might be naturally predisposed toward a kind of
Hippocratic “first, do no harm” stance are afforded no such discretion under ERISA’s
strictures.
Simply stated, if you lack the, skill, prudence, a=
nd
diligence of an expert in such matters—you are expected to get help.=
' + ENDSHOW_MESG + '
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tes![](3D"buttons.gif")
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