| 
Are you aware that every officer and board
member of a retirement plan sponsor is potentially personally
liable for the investment results of both trustee-directed
and participant-directed accounts? Are you certain that you
have established adequate controls and procedures to protect
yourself against fiduciary liability?
Most plan sponsors think that they are
protected from liability under ERISA 404(c) as long as they
offer participants a range of investment funds, provide a
prospectus for each fund and allow for periodic changes to
those funds. They assume that participants are then responsible
for investment results. Unfortunately, this is not the case.
ERISA 404(c) compliance and prudent investment
management require much more. In our compliance reviews, Sunlin
is finding again and again that the procedural and investment
information provided to participants is lacking in many different
404(c) areas, what is being communicated is not sent in a
timely manner, and little or none of it is documented in a
way that will provide protection from liability. We also find
that either there is no Investment Policy Statement or it
is deficient relative to current prudent standards, and that
performance monitoring procedures are inadequate. Consequently,
there are gaps in the platform of available investment options,
and under-performing funds are not being replaced. It is critical
to recognize as well that most if not all vendors/service
providers contractually deny fiduciary responsibility for
404(c) compliance and fund performance.
The drop in participant account
values and consequent increase in employee litigation; current
media focus; government scrutiny of business/accounting practices
and ethical principles; a continued downturn in the economy;
and the increase in DOL and IRS audits.
Sunlin Consulting can help you . . .
- Minimize the fiduciary liability exposure associated
with your plan's participant-directed investments by ensuring
that compliance with 404(c) regulations is established,
documented and maintained
- Create a comprehensive, well-structured Investment Policy
Statement
- Implement and maintain a balanced, diversified investment
program for your plan participants
- Please click to download
a list of common 404(c) compliance gaps
- Please click to download
our 404(c) compliance checklist
Investment Advisory
Services are offered through our wholly owned subsidiary,
Sunlin Consulting Investment Advisory Services, LLC
An SEC Registered Investment Advisor |
