Small business owners have been trying to understand the implications – and there are many – of the new healthcare plan.  Then, on October 14, 2010, the Department of Labor released its final rules governing the conduct of 401k plans.

Any employer sponsoring a 401k plan, regardless of the size of the plan, is going to be under a great deal of pressure to develop and communicate information that they previously thought little about.

As a plan fiduciary, the business owner is going to have to regularly review and monitor the cost and effectiveness of the plan.  They will have to take action based on any findings that indicate action is necessary.  They will have to document the findings, process, and actions in a Due Diligence file.

The file must contain: Written Guidelines and Process for Plan Review, an Investment Policy Statement, a Comprehensive Fee Analysis and Benchmarking, Evaluation of Participant Education Programs, Minutes from Every Meeting Pertaining to the Plan, and a Document Review of the Plan’s Fiduciary Operation.

Every two years a company should call in all providers, and some competitors or independent evaluators, to determine whether or not the plan is the best available for the employees.

The Supreme Court, on February 20, 2008, voted 9-0 to allow employees to sue their employer to recover investment losses or for general mishandling of the 401k plan.  On August 12, 2010, a federal judge gave final approval to a $16.5 million settlement of an excessive 401k fee suit against Caterpillar, Inc.  This was followed by a settlement of $15.1 million involving General Dynamics.  Many plans routinely include retail mutual funds as core investments in the 401k plan.  This was specifically forbidden in the Caterpillar agreement. The 142 page Department of Labor rule is effective December 20, 2010.

We will give you independent, unbiased evaluations and hold provider’s fingers to the fire in terms of providing information, education and ongoing monitoring of how the plan is performing.  We can also provide a Model Comparative Chart, helpful in comparing investment options.