Your Responsibility

The fact that you are visiting this site suggests you want the best retirement plan for your employees and for you. Offering a tax-deferred 401(k) plan is a big responsibility. Simply put, when you implement a retirement plan, you assume legal responsibility for managing someone else’s money. You are bound by participant and US Department of Labor law to act with financial prudence—careful, thoughtful and deliberate decision-making that benefits your employees.

So…how do you do this?

There are are four basic rules: Act prudently. Prepare a well-defined plan. Implement the plan as designed. Evaluate the plan at pre-determined intervals.

The Foundation for Fiduciary Studies, a non-profit fiduciary education organization, identifies seven Uniform Fiduciary Standards of Care that must be met by the person or firm who has the responsibility for investment decisions.

1.Know the standards, laws, and trust provisions.

2.Diversify assets to the specific risk-return profile of your client.

3.Prepare an investment policy statement (IPS).

4.Use prudent experts—money managers—and document due diligence.

5.Control and account for investment expenses.

6.Monitor the activities of prudent experts.

7.Avoid conflicts of interest and prohibited transactions.

It sounds like a lot to do, and it is. The standards are rigorous; working precisely and meticulously is essential. Take a look at the next few pages to learn a little more about each standard. The information introduces you to fiduciary responsibility; it is not an all-inclusive list or intended to be legal counsel.