A Change in Legislation Could Affect Fiduciary Guidance for Many Company Retirement Plans


By Richard Applegate, CFP®, AIFA®, CPFA, ChFC®, CLU®

My associate, Alex Papson, and I recently had the opportunity to attend the NAPA DC Fly-in Forum in Washington, D.C. where key government figures met with industry leading retirement plan advisors from around the country to present legislation in the works and for us to ask questions as well as offer our comments. I would say some of the ideas reminded me of dialogue from “The Graduate,” where Benjamin’s father says “Ben, this whole idea sounds pretty half-baked” and Ben replies, “No, it’s not, Dad. It’s completely baked.” In the case of some of the proposed legislation, I’d side with Ben’s dad.

For example, one “half-baked” idea as I see it is a recently proposed bill that’s been introduced in the Senate, the Small Business Employee Retirement Enhancement Act. It eliminates plan sponsor fiduciary responsibility for oversight of a retirement plan’s service providers and investments where the company has fewer than 100 employees. Yes, it might eliminate responsibilities for thousands of plans where small companies have difficulty maintaining fiduciary best practice standards. And it might incent other small employers to offer retirement plans to their workers who otherwise have not because of the perceived liability they want to avoid as a fiduciary. But without such responsibilities, it’s hard to imagine the outcome at retirement for plan participants where plan expenses aren’t monitored, or investments have no basis for why they were selected and offered. Because retirement plans must be offered for the exclusive benefit of plan participants and their beneficiaries, we think it’s imperative that plan sponsors are responsible for fostering and ensuring that outcome.

As legislation develops in Congress, the Employee Benefits Security Administration (EBSA) continues to rack up civil investigations they have conducted along with the monetary rewards from settlements. According to recently published EBSA enforcement data for the year ending 2017, regulators closed 1707 civil investigations with 65% of those cases paying monetary compensation for plans or other corrective actions. A total of $682.3 million was recovered by EBSA investigations. Along with civil investigations, the EBSA closed 307 criminal cases with 113 persons indicted for misdemeanor or felony crimes related to employee benefit plans. With 650,000 retirement plans under its purview, the EBSA has a large pool to fish for its investigations. It raises the question for plan trustees and retirement committee members, “What are the definable, measurable and repeatable processes you follow in overseeing your company plan?”

Fiduciary guidance is available from qualified advisors; plan trustees just have to know how to evaluate the advisors they’re considering. That means evaluating advisors for their experience, credentials, and training as fiduciary advisors. Selecting any outside service provider for a company retirement plan requires support to the evaluation and selection process but none is more important that the decision behind selecting a co-fiduciary advisor to the plan.

The DOL has published guidance on how to evaluate and select a plan’s advisor. That article can be found HERE or email our office for a copy to be sent to you.

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Rick Applegate is Managing Director of DBR Fiduciary Plan Solutions at

D. B. Root & Company, LLC, a Pittsburgh-based wealth management firm. If you would like to contact the author, Rick Applegate, please e-mail him at rapplegate@dbroot.com or call 412-227-2800

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.


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