One of the advisors we work with recently called on a 5M plan that just had a fiduciary audit by competing firm that said”everything was fine.” The advisor then asked prospect about the timing of their deposits.

“We are getting it in by the 15th of the following month” the prospect said.

The advisor went on to explain that current practice didn’t qualify for safe harbor protection. See enclosed article. We routinely see plans that are not sending the deposits in on time. Great way to open new cases.

http://www.martindale.com/labor-employment-law/article_Miller-Johnson_956324.htm

Be sure and see end of article

“The third area of lawsuits, and perhaps the scariest area for the majority of employers, is based upon opportunity cost and plan fees.”

http://www.401khelpcenter.com/401k/robertson_opportunity_cost.html

I was with an advisor today that closed an 8m 401k Safe deal today. We had met with the controller a couple of weeks ago; today we had the first meeting with CFO. Most people still have their default option set to go into a money market account because they assume it’s safe. This is what everyone did prior to pension protection act of 2006.

It wasn’t a complicated conversation. How many people know what QDIA means? The advisor made it simple. The people in Washington didn’t think it was a good idea for someone that was 25 years old to let their retirement plan money sit in a money market account for 40 years so they simply said if you want the 404c protection you need to invest it.

The prospect got it.

He also liked the idea that with 401k Safe he no longer had to do a 5500, have a plan audit, administer hardships, loans, withdrawals, or serve as the named sponsor of the plan. It was a short meeting.

http://www.fixingthe401k.com/the-blog/2008/12/22/qdia-notice-requirements-is-your-plan-in-compliance.html

The majority of advisors don’t market and sell 401(k) plans. Many advisors can’t make the math work. Too much paper work relative to the revenue. It’s also a complicated field one must be versed in to successfully guide clients through the maze of regulations.

We are working to disrupt the market with 401k Safe. First, our advisor partners simply need to be able to communicate the fiduciary risk associated with sponsoring a 401k plan, and that’s not complicated. If you don’t follow the guide lines laid out by Erisa you have unlimited personal liability. Second they need to have a solution to the problem and that is where 401k Safe comes in.

Once a client adopts our plan we become the sponsor, administrator, fiduciary of the plan, and it’s easy! Our advisor partners do the annual enrollments, 401k Safe takes over as the fiduciary, and the client gets the most logical 401k plan solution on the planet.

http://eba.benefitnews.com/news/more-401k-plan-sponsors-are-dissatisfied-2683005-1.html

Feb 17, 2010 — The Law Offices of Howard G. Smith has announced its investigation of potential violations of the Employee Retirement Income Security Act violations by Toyota Motor Corporation, related to design defects in its vehicles’ acceleration systems. —

A press release said a shareholder lawsuit pending in the United States District Court for the Central District of California claims that between August 4, 2009, and February 2, 2010, Toyota and certain of its officers and directors misrepresented and/or failed to disclose that there was a major design defect in Toyota’s acceleration system, which could cause unintended acceleration, thereby causing Toyota securities to trade at artificially inflated prices.

Let me think about this.

I can give my client this calendar listing all the work his key people will have to do during the next 12 months to maintain a 401k plan, or I can tell my client that “I understand you have a business you are running and you are trying to make money, I have found an innovative solution that allows you to throw this calendar away.

I understand you need your CFO giving you valuable information as opposed to dealing with employee loans, hardships, 5500’s or year end plan audits. I understand you need your CFO to focus on your business. The management team at amsource running 401k Safe who have been in business for 20 years will actually put their names on all of the legal documents and take personal responsibility as plan Sponsor, Administrator and fiduciary. Hmm, let me think about it….

http://wwwrs.massmutual.com/retire/pdffolder/rs2468.pdf

http://www.planadviser.com/West_Virgina_Mulls_State_Retirement_Plan_for_Small_Businesses.aspx

Given the economy we have seen a higher number of clients that have laid off part of their workforce. Each situation is different and the IRS rule is not clear. The IRS states, “Whether a partial termination occurs depends on the individual facts and circumstances of a given case.”

If you have clients that have downsized encourage them to execute on their process to comply. If you are calling on new prospect it might be an opportunity to add value if they down sized and failed to fully vest employees that were laid off.

http://www.irs.gov/retirement/participant/article/0,,id=151798,00.html

Think about it. A company can either expend energy in areas that will yield profits or they can push paper. The only resource that is truly limited is time. It is by far the most precious resource on the earth. Year end 401(k) audits, investment committee meetings, processing employee loans and hardships while critical yield no impact on the bottom line. Given the opportunity, high performance management teams will work to outsource all activities that don’t have the potential to increase net income.

http://money.cnn.com/news/newsfeeds/articles/marketwire/0577565.htm