By Rich Tegge

As we work with and educate business owners (Plan Sponsors) about their 401ks we often hear the statement, “I didn’t know what I didn’t know.” Not the answer you want to give an auditor from the Department of Labor (DOL) who is reviewing your 401K plan.

For most business owners, I refer to 401K or retirement plans as “the sleeping dog in the corner.” They put considerable effort into putting it in place, and now it’s running smoothly, so why on earth would they disturb it? Why create work? As a business owner, there’s already enough on your plate. Thus, you leave your 401K alone, trying not to bother or irritate that dog because there are plenty of other things biting at your rear every hour of the   day.

The reality is that if you don’t tame the dog now you may eventually have to tangle with the DOL, and they could take a serious bite. The world of 401Ks has  seen and  is  continuing to  see considerable change. Additionally, in fiscal year 2015, 67.2 percent of the DOL civil investigations resulted in monetary or other corrective actions (U.S. Department of Labor, Employee Benefits Security Administration 2015). If you aren’t keeping  up with the new regulations, you may be out of compliance and that could mean  costly fines.

If you’re concerned your plan may have some deficiencies, how can you help protect yourself against this potential costly liability? The first and most important question to ask: “Is the advisor  servicing  our  plan  a  Signed/Named  Fiduciary?” Simply give him/her a call and ask. If he or she isn’t, you will want to  raise the question as to how  they will  service your  plan  after the new DOL Fiduciary Rule takes effect in April of 2017. A top priority for your plan is to have a  named fiduciary who shares the fiduciary responsibility and liability with you.

With that out of the way, what else should you pay attention to in order to avoid getting bit? Reviewing the DOL Check List is a good start. Set this as your minimum standard for the contents of your Fiduciary File (if you are interested in a copy of the DOL’s Check List, please email and simply type DOL Audit Letter in the subject line and we will send you a copy). Your Fiduciary File should be reviewed a minimum  of once a year to ensure all needed  documentation is current. Key items include, but are not limited to: investment policy statement, investment committee notes, investment line-up review, fidelity bond, minutes of the plan board, IRS form 5500, sample statements, plan fee structure, company organizational chart, ERISA compliance documents, plan fee benchmarking, plan performance documents and a host of other items. The DOL Check List contains 22  areas of  documentation you would need to provide if  audited.

Another area that is gaining momentum with DOL is Participant Education. You should add to your Fiduciary File an Education Policy Statement (EPS) and education calendar. We recommend providing participants formal retirement planning education at least once a year, but prefer twice   annually.

Compliance with the DOL is all about documentation. I realize it can seem a little tedious, but maintaining the appropriate docu- mentation will help you avoid the potential of significant fines from the DOL. By partnering with a good plan advisor much of the effort  can be outsourced, leaving you to focus on running your business.

Steps to Help Gain/Ensure Plan Fiduciary Compliance:

  1. Make sure you are working with an advisor who is a signed/ named fiduciary on your
  2. Have a fiduciary file audit completed (this is a service provided by most 401K plan advisors) and update any deficiencies
  3. Implement a service calendar with your advisor  to ensure you are completing and documenting needed tasks to maintain  compliance.If you have not reviewed your plan in some time, you may find that engaging an advisor will not only help with your DOL compliance but may also lower plan fees for you and your participants. Most 401K advisors will offer a complementary plan audit that is fairly painless and very educational. —  SBAM 

Check out this article as this month’s Featured Story in the January edition of SBAM Focus Magazine!

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U.S.  Department  of  Labor,  Employee  Benefits  Security  Administration  2015, Fact Sheet 1- EBSA Restores Over $696.3 Million to Employee Benefit Plans, Participants and Beneficiaries, viewed December 15th, 2015, <https://www. sheets/ebsa-monetary-results.pdf>

Rich Tegge is a financial advisor located at Wealth Strategy Group 300 S. Front Street Ste C, Marquette MI  49855. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 906-228-3696 or at

Originally published in Focus, the member-only publication of the Small Business Association of Michigan

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