401(k) Specialist Issue 2 - 2019 - 17

401(k) BEST PRACTICES
He recently wrote an article that appears
on 401kspecialist.com that, in so many
words, said as much.
" Why do committees wait until they
are sued to pay attention to these things? "
Reish said in our interview. " The piece
came directly out of my experience. Especially
for big companies with committees
and in-house lawyers and the money to
hire outside ERISA experts, I don't know
why they're still getting sued and why they
haven't figured it out. "
Noting a shift in targets to more private
colleges and universities, he says they're often
a " mixed bag. "
" There have been some pretty big settlements
but there have also been some losses,
meaning cases where universities have won.
They're also against companies that have
their own investments in the plan, so it'd be,
by definition, a company that has an affiliated
insurance company or an affiliated mutual
fund company. So that's where a lot of all
litigation is right now, and I think that will
continue for a while. "
What's especially vexing, he emphasizes,
is that the rules " about which they're now
being sued " are far from new.
" The DOL wrote an exemption in 1977
about what a company had to do to have
their own products in their retirement
plan. Here we are 40-plus years later and
there's all kinds of litigation about it. If a
committee wants to know how to avoid
these problems I, or any good ERISA
attorney, can tell them. It's not unknown,
it's just not known to committees. I would
fault people for not getting more fiduciary
education, particularly if they're big
enough to afford the legal fees. "
Which brings us back to his original
frustration with committees and
their lack of fiduciary awareness.
The solution, of course, is also more education
from advisors, something " quality,
specialized advisors currently give their
committees, as well as an expansion and
diversification of the other services they
offer, " Reish says.
" There are all kinds of solutions advisors
and recordkeepers can provide, like projections
of retirement income, automatic
enrollment, automatic deferral increases,
investment management services (particularly
for older employees), retirement education
for employees age 50 and older, how
do you claim Medicare and when should
you claim it, etc. "
Historically, he adds, the big frustration
was that sponsors wanted employees to
think the plan was free, something revenue
sharing, and similar tactics were used to
make it appear. For obvious (and litigious)
reasons, " there's been a lot of improvement
in the last five or 10 years. "
" I just wish that, across the board, there
was more transparency; that employees had
more transparency, the plan committee had
the benefit of more transparency and the
advisors were more transparent (although if
they're pure fee-for-service, they are transparent).
It's one thing to have disclosure,
but disclosure on page 20 of a 40-page
document is not transparency. "
For example, committees could be
better about reporting to participants what
it is they do to ensure investments and
expenses are appropriate, so employees can
understand what good committees do for
them. He believes well-run committees
are already doing a good job in the area
but wished they would spend more time
on whether or not employees are accumulating
enough money to retire and, if not,
what can be done about it.
" There's so much more to do beyond
funds and fees. It's time to move on. I
understand the early preoccupation with
both, and that's where the litigation occurs.
But for someone focused on their 401(k)
plan that has a good advisor ERISA attorney,
we know how to do that. We know
how to minimize the risk of litigation. "
ISSUE 2 2019 | 401kSpecialist.com
17
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401(k) Specialist Issue 2 - 2019

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