July 24, 2012 (PLANSPONSOR.com) - Plan sponsors should use the “highest
standard of care” when it comes to retirement plans, but according to one attorney,
several common mistakes prevail.
Not Hiring a Financial Adviser
Plan sponsors should always enlist the help of an adviser, Ary
Rosenbaum, managing partner of The Rosenbaum Law Firm P.C., told PLANSPONSOR. Aside from purchasing
fiduciary liability protection and hiring a competent third-party administrator
(TPA), Rosenbaum said, there is no better protection for liability than hiring
a knowledgeable adviser.
“As long as you have an employee … you need to hire a financial
adviser,” he said. “It’s impossible for the plan sponsor to do that all on their
Plan sponsors must keep in mind that the role of a plan adviser is not
just choosing investments, he added.
Not Caring What Participants Are
Rosenbaum likened this to choosing the most expensive item on the menu
because someone else is footing the dinner bill. It is still the plan sponsor’s
responsibility to find an affordable plan.
“Plan sponsors have to find out whether the fees being paid are
reasonable or not,” Rosenbaum said.
Litigation can arise if the participants think they are paying
unreasonable fees, and plan sponsors should especially be aware of this in the
wake of August 30participant fee disclosure regulations, effective August 30
Sponsors Should Not Delay Preparing for 404(a)(5)”).