Most Plans are not in compliance with ERISA or DOL regulations
As a general rule, Plan Sponsors do not have adequate resources assembled to fully comprehend and implement the many Plan design and operational requirements promulgated by ERISA and the DOL. Plan sponsors can, however, segment and isolate the major areas of concern and secure appropriate professional assistance to properly discharge their obligations as described below.
- The Plan can contract with properly qualified investment advisors that acknowledge their status as a co-fiduciary and thus can be considered an investment manager under ERISA. Only an investment manager can provide statutory relief for the plan sponsor fiduciaries for investment oversight.
- The Plan should engage the investment manager to design the 404(c) compliant investment menu.
- The plan can select an investment platform provider that will contractually provide assistance in meeting the communications, notice and document requirements of 404(c) regulations that are best addressed by such a firm. to secure the statutory relief as a 404(c) plan
- The plan can select competent partners in a third party administrator, Recordkeeper, ERISA counsel, and custodian to both delegate remaining operational requirements and secure proper advice regarding evolving regulations and special circumstances that arise.
The reasons for failure to be in compliance are numerous: Rules and regulations are extremely complex and not necessarily "common sense." There's a great deal of misunderstanding about the rules by Fiduciaries and their consultants alike. It's expensive and difficult. Sometimes it's difficult to differentiate the capabilities of one service provider who can insure compliance from one who cannot. Failure to comply doesn't necessarily have any immediate negative consequence and thus, there's a low priority to fix something that doesn't seem broken.