Panel members stressed that plan sponsors and advisers should have already started or should start soon the task of getting in compliance. Scott Dauenhauer, President, Meridian Wealth Management, warned sponsors will pay a lot more for adviser services if they start the process late. Tom Blanchar, 403(b) and 457 Product Manager, StanCorp Equities, Inc. (The Standard), pointed out that Request for Proposal response times will get longer as more plans get into the search process, and sponsors must also count in time for participant education and enrollment.
Sponsors should not underestimate the value of evaluating and improving their 403(b) program. Brent Bentrim, Managing Director, Carolopolis Fiduciary Counsel, said sponsors should look at the process as a good thing that will benefit participants and lower program costs. Dauenhauer added that sponsors should reevaluate their program every few years to look for ways to make it more simple and valuable to participants.
Panel members also told attendees not to be afraid to use Employee Retirement Income Security Act (ERISA) standards to run their program. Blanchar pointed out that many ERISA rules are best practices, and sponsors should operate under best practices.
During vendor selection, the panel warned that sponsors should not use providers with long, high, or rolling surrender charges. However, vendors should not be selected solely on the basis of price either.
Sponsors should not exclude current vendors in their search process. Bentrim suggested sponsors and advisers get feedback from participants and union representative about the current vendors’ services. Blanchar pointed out that current vendors may already have systems in place that are needed for compliance with the new regulations.
Ongoing, the panel noted that sponsors should not forget to monitor providers. As Bentrim said, sponsors are not just responsible for getting the new program in place, but must perform ongoing reviews.
Finally, sponsors should be prepared to be audited. Blanchar warned that the new regulations came out of the results of sweeping audits by the IRS, and they are likely to do a second run to see the results of the new guidelines.