Multiemployer Fiduciary Investments Issues

Posted by admin on: 2007-07-25 10:28:14

Taft-Hartley for the defined contribution market is often called Multiemployer 401k.

With recent emergence of 401k, profit sharing and money purchase plans these solutions have become a tool in the Taft-Hartley market. If is important for Trustees and Fiduciaries to understand their rules and responsibilities.

The linked article points out, and we have stated before, (whether Taft-Hartley or single employer)that many 401k programs are NOT in compliance. We enclosed a very comprehensive link for the Taft-Hartley - Multiemployer market including the following excerpts and comments.

"The implications for trustees are significant. Since Mutual fund manager, brokers and banks originally are not fiduciaries under ERISA, investing in mutual funds does not provide automatic protection form personal liability, unlike investing plan assets through a true investment manager".

Most plans we reviewed, do not have co-fiduciary protection, without this protection. It is much harder to achieve, without a fiduciary professional, compliance with ERISA.

"Required analysis: In determining whether to make a or continue an investment, fiduciaries must analyze whether " the particular investment...is reasonably designed as part of the portfolio...to further the purpose of the plan, taking into consideration the risk of loss, and the opportunity for gain associated with the investment,,," DOL 404a-1(b)."

In the many qualified retirement programs we reviewed, a non-fiduciary and or a non-investment professional is making the key investment decisions. It is important that a professional fiduciary is making the investment decisions both to comply with the rules, and greatly reduce your liabilities.

"Most plans do not comply with 404c. The protection of 404c disappears if a plan fails to comply with the requirements of the DOL regulations. Most plans that style themselves as "participant-directed" plans do not comply with all DOL regulations requirements.

If any of these above issues applies to your firm, it would be important that you review your plan, to correct these flaws. Also, many of the plans we have reviewed, the ones not in compliance are also the same ones that are often far the most costly.

The enclosed link to Multiemployer Fiduciary Investments Issues.
http://www.ifebp.org/pdf/webexclusive/06aug.pdf

Post new Comment

This site does not allow anonymous comments. Registered members can login to participate. Registration is free and takes only a few seconds

Our investment strategy is straightforward and easy to understand.

Registered Investment Advisors

Past performance is no guarantee of future returns.

Member Better Business Bureau