This is the third in a series containing remarks by Chuck Humphrey, Esq. that were made as part of a panel discussion on ERISA fiduciary responsibility issues at the annual meeting of the Tax Exempt /Governmental Entity (“TE/GE”) Councils*. They have been edited for purposes of this series.
The following remarks were provided as part of a panel discussion on ERISA fiduciary responsibility issues at the annual meeting of the Tax Exempt /Governmental Entity (“TE/GE”) Councils*. They have been edited for purposes of this series.
Remarks of Charles G. Humphrey at the TE/GE Councils* Annual Meeting, Baltimore, MD, February 21, 2018 – Part I
In Part 1 we discussed the importance of understanding the buying power of a higher education institution to assess whether fees are reasonable as dictated under 408(b)(2). Here in Part 2 we will review ways to create increased buying power in an environment where participant directed legacy contracts control a large portion of the plan value.
The Buying Power Challenge Facing ERISA 403(b) Plans
One of the foundational tenants of fiduciary responsibility is the prudent selection and oversight of plan service providers and investments. Since the 408(b)(2) regulations became effective, we have been living in a new age of accountability for determining, evaluating, documenting and capitalizing on the “reasonableness” of fees for a company or non-profit institution ERISA retirement plan. In the final 408(b)(2) regulations alone, the Department of Labor (DOL) used the word "reasonable" forty-one times specifically referring to fees, compensation, contracts and arrangements.
No matter how good you think you are at something, sometimes it makes sense to go back to the fundamentals. Whatever the activity, anomalies can slip into your game and without noticing you end up doing things less than optimally. As a long-term tennis player, that means going to my pro every six months or so and having him again go over the basic strokes, almost as if I am a beginner. Interestingly, it always helps.
In our last post, we spent some time responding to Nevin Adams’ elementary checklist intended to help plan sponsors set a basic fitness level for their plan management. This week, we shift our focus to Bob Lawton’s recent guidance on How to Craft the Best 401(k) Investment Menu for 401(k) Specialist.
We all have our morning routines. Mine typically begins around 5 and heading to the gym. Now that I’m in my 60s, I focus more on not losing ground than getting buff. That done, typically get to my desk, whether at home or the office, by 7 to go through email as well as a fairly wide range of articles and updates that have come in from various news feeds, Google Alerts and news aggregators. Usually, these are just background. Occasionally one or two make me pause and think of interacting with the piece and/or the author.
Last year was a signal year for ERISA fiduciary responsibility. And, no, I’m not talking about the DOL conflict of interest rules, although they of course were big. Here I will share with you some developments on the fiduciary responsibility litigation front that may require your attention. I know these developments have caused me to modify the advice I give to my clients. First, let’s briefly survey the world that has been created over the last 10 or 15 years.