401(k) Fees: What You Need to Know in 2011
One of the key issues that will surely be a challenge for plan fiduciaries and participants is the multiple sets of regulations relating to 401(k) fees which were recently released by the Department of Labor. The regulations call for service providers to 401(k) plans to deliver more information about their services and fees to plan fiduciaries. Plan fiduciaries will be expected to review and consider this information in making decisions regarding the reasonableness of 401(k) plan services and fees. In addition, plan fiduciaries must provide new disclosures to participants, who self-direct their accounts, including more information about investment-related expenses as well as administrative and individual expenditures and may be liable if participants incur investment losses and participant disclosure was not complete as required by the new regulations. While the new disclosure regulations are intended to improve the information that plan administrators and participants receive about 401(k) plan fees and expenses, implementation of the new requirements is expected to be complex and costly for plans as well as service providers, and plan fiduciaries may find that interpreting these requirements is difficult and could be confusing.
The Knowledge Group is assembling a panel of distinguished thought leaders, professionals and key regulators to help plan fiduciaries and participants understand issues arising from the new 401(k) fees disclosure rules. The speakers will present their expert opinions in a two-hour LIVE webcast.
Scott D. Kiper, JD, Senior Manager, Compensation and Benefits Consulting,
Grant Thornton LLP
- Provide a primer on fee terminology and definitions, including types of plan fees and expenses, who pays the fees, payment options, mutual fund fee terms, direct vs. indirect compensation, and typical revenue sharing arrangements
- Discuss fiduciary responsibility as it relates to fees and investments. We will answer key questions such as, who is a fiduciary, how do you know you are a fiduciary, and what are a fiduciary’s duties under ERISA?
- Discuss what are reasonable fees and expenses, including the expenses a plan can and can’t pay, how the plan can charge expenses to participants, etc.
Jeleen Guttenberg, Partner,
Bracewell & Giuliani LLP
- Interim final regulation under Section 408(b)(2) of ERISA — who must provide the disclosure, what must be disclosed, and when it becomes effective.
Roberta Ufford, Principal,
Groom Law Group, Chartered
- Introduction/background for discussion of 401(k) fee issues, including (a) transition of retirement plans from the defined benefit system to participant directed 401(k), which has shifted investment risk and decision making to plan participants, (b) evolution of plan service and fee arrangements that rely on asset-based charges and indirect compensation (i.e., revenue-sharing) arrangements, and (c) recognize that new service provider and participant disclosure requirements are issued and implemented in context of “other” disclosure regulation, including pending rules in connection with benefit statements, Schedule C disclosure requirements, DOL and SEC initiatives to address disclosure in connection with target date funds, and SEC proposed rulemaking relating to 12b-1 fees.
- I agree with Jeleen that it will be important to provide an overview of of requirements under the interim final regulation under section 408(b)(2). A similar overview of requirements under the final participant disclosure regulation also will be important (who provides the disclosure, what must be disclosed, and when it becomes effective).
- It may be helpful to discuss how the service provider disclosure rules are expected to support participant disclosure, and also provide some comparison of the participant disclosure and service provider disclosure regulations, i.e., comparison of purposes and objectives (e.g., sponsor decision making vs. participant decision making), similarities and differences in the types of information to be provided (e.g., different level of detail on fees and services), comparison of obligations that plan fiduciaries have in complying with each rule.
Michael Hadley, Partner,
Davis and Harman LLP
- In many 401(k) plans, some of the most significant fees are those associated with the plan’s investments. We will highlight recently released research on the fees of mutual funds held in 401(k) plans.
- Contrary to the claims of some, the data shows that plan fiduciaries and 401(k) participants are cost-conscious, as 401(k) assets invested in mutual funds are concentrated in lower cost funds with below average portfolio turnover. We will highlight trends over time in average asset-weighted expense ratios for stock, bond, and money market mutual funds held in 401(k) plans.
- Despite plentiful evidence showing 401(k) investing is a great deal for those with access to these plans, a number of well-publicized lawsuits have been brought by class action plaintiff firms. We will provide an overview of key legal rulings to date. And we will highlight what lessons plan fiduciaries can take from these cases in managing their own plans.
Tom Kmak, Chief Executive Officer,
- The Retirement industry is undergoing a revolutionary change. A desire for transparency has led to increased government regulation regarding fee disclosures to plan sponsors and participants.
- These disclosures will naturally lead to more fiduciaries performing their required duty to assess fee reasonableness. But fee reasonableness cannot be determined without examining the value plan sponsors are receiving for what they are paying
- This inexorably linked value chain is going to lead to an increase in Benchmarking as Plan Sponsors fulfill their fiduciary duty under ERISA section 404(a)(1)(a).
- Fiduciary Benchmarks will literally produce THOUSANDS of fee benchmarking reports this year establishing itself as the leading benchmarking firm in the industry.
- During this webinar, Fiduciary Benchmarks will outline the proper types of data that should be used in a benchmarking exercise, how to establish a proper benchmark group, and how to assess FEES and VALUE for a defined contribution plan.
Who Should Attend:
- Financial Advisers
- Plan Fiduciaries
- Retirement Plan Practicing Lawyers & Consultants
- Plan Administrators
- Fund Managers
- Industry Watchers
- Employee Benefits Professionals
- Third Party Administrators
- Human Resource Managers who oversee employee benefit plans
- Human Resource Managers who oversee employee benefit plans
- Anyone who is involved in retirement plan administration
Roberta Ufford is a principal of Groom Law Group, Chartered, where she has spent more than 15 years advising ERISA-covered plans, governmental plans, and plan service providers, including recordkeepers, banks, and insurers, on ERISA’s fiduciary responsibility provisions and other laws affecting employee benefits plans. Ms. Ufford is recognized by The Legal 500 Guide for her excellence in the Employee Benefits Tax field, cited by clients as “practical, responsive and efficient, and very knowledgeable in the area of fiduciary responsibility”. Roberta is a frequent speaker before industry groups on ERISA fiduciary matters.
She is a graduate of the George Washington University School of Law with High Honors and is admitted to practice in the District of Columbia. Before attending law school, Roberta served for five years as a military intelligence officer in the U.S. Army, attaining rank of captain.
Roberta Ufford is a principal of Groom Law Group, Chartered, where she has spent more than 15 years advising ERISA-covered …
Jeleen Guttenberg is a partner in the Seattle office of Bracewell & Giuliani. Jeleen applies the fiduciary responsibility provisions and prohibited transaction rules of ERISA to clients’ businesses and activities, including in connection with the formation of investment funds and marketing of other investment products, mergers and acquisitions and ERISA litigation. Her clients have included employers, managers of hedge funds and private equity funds as well as major banks and financial institutions, issuers, underwriters and broker-dealers involved in investment management, financings, structured finance transactions and securitizations.
Jeleen also assists clients with the design and implementation of compensation programs including equity compensation, deferred compensation, employment and severance arrangements. Her work in this area includes providing counsel on tax compliance (including new Section 409A of the Internal Revenue Code) and on securities law compliance regarding proxy disclosure of executive compensation, as well as recently developing requirements including those associated with the Dodd-Frank Wall Street Reform and Consumer Protection Act (including shareholder voting requirements regarding executive compensation (“say on pay”)) as well as employee benefits matters that arise in the context of mergers and acquisitions and clients’ day to day activities.
Jeleen Guttenberg is a partner in the Seattle office of Bracewell & Giuliani. Jeleen applies the fiduciary responsibility provisions and …
- Born 10/14/1960 on the South Side of Chicago
- Valedictorian Oak Forest High School, President National Honor Society, U.S. Marine Corp Outstanding student-athlete
- Attended the USAFA to play basketball for Greg Popovich. Transferred to DePauw University in Greencastle, IN. Lettered all 3 years in basketball and graduated Phi Beta Kappa with Bachelor of Arts degrees in economics and computational mathematics.
- Worked for accounting firm Crowe, Chizek & Company from 1982 – 1986. Management Consultant in the benefits practice 1984 – 1986.
- Managed Employees Benefits Trust Department of Midwest Commerce Bank, 1986-1988.
- Associate with William M. Mercer, Inc. in Kansas City 1988 – 1990, responsible for the overall delivery of defined contribution services to a wide variety of clients.
- Started JPMorgan Retirement Plan Services business in 1990 with American Century. Upon leaving in October 2007, that business employed 1,100 people serving 200 large plan sponsors with over 1.5 million participants and more than $115 billion in assets.
- During his 18 years with Retirement Plan Service, the company initiated numerous industry firsts including no blackout conversions and the innovative employee education program, Audience of One. Tom also served on the Executive Committee for JPMorgan’s asset management business.
- CEO and co-founder of Fiduciary Benchmarks, 2007 to current.
- Named by Ingram’s magazine as one of Kansas City’s inaugural “Forty under Forty,” Tom is a recognized expert in the retirement services industry who has been a featured speaker at various conferences and has published articles in some of the most well-known periodicals in the industry.
- Married to wife Catherine of 29 years with two sons, 23 and 19. Outside interests are golf, basketball, family and reading.
Born 10/14/1960 on the South Side of Chicago Valedictorian Oak Forest High School, President National Honor Society, U.S. Marine Corp …
Scott is a Senior Manager in the Compensation & Benefits Consulting Practice at Grant Thornton. Scott is an attorney by background and has over 15 years of experience in the design, administration, compliance and implementation of qualified retirement plans, with a focus on defined contribution plans.
Scott has managed numerous engagements on retirement benefit redesign, the design of plan governance structures and processes, and compliance and governance reviews. He provides consulting on merger and acquisition due diligence and strategy issues. He consults on all matters associated with IRS and DOL compliance and resolution programs and has a thorough understanding of coverage and nondiscrimination testing rules. He also performs fee benchmarking projects for qualified retirement plans.
Prior to joining Grant Thornton, Scott was a Consultant with a major HR Consultancy Firm in Chicago. There, he was responsible for enhancing and expanding the firm’s employee benefits consulting practice in the Chicago and St. Louis markets. Prior to that, Scott was a Principal with another major HR Consultancy Firm, also in Chicago.
Scott is a Senior Manager in the Compensation & Benefits Consulting Practice at Grant Thornton. Scott is an attorney by …
Effective August 1, Michael Hadley will join the law firm Davis and Harman LLP as a partner in the firm’s employee benefit and legislative practice, advising clients on the full range of tax, ERISA, and other laws affecting benefit plans. He has a particular focus on helping financial institutions that sell products to defined contribution and defined benefit plans, IRAs and 529 plans navigate the special rules that govern those plans. He joined Davis and Harman from the Investment Company Institute, where he was Associate Counsel for Pension Regulation. His responsibilities included advocating for the Institute’s membership on retirement security issues and assisting members and Institute staff in understanding tax and ERISA rules that affect defined contribution plans, IRAs, and similar savings vehicles. Among other duties he managed the Institute’s work implementing the Pension Protection Act and responding to 401(k) fee, investment advice, and fiduciary developments in Congress, DOL, and the courts.
Mr. Hadley is a frequent speaker on the latest retirement savings policy developments coming out of Congress and the regulatory agencies. He co-authored The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2009 ICI Research Fundamentals, Vol.19, No. 5 (August 2010) (with Sarah Holden and Shaun Lutz) and 401(k) Plans: A 25-Year Retrospective, ICI Research Perspective, Vol. 12, No. 2 (Nov. 2006) (with Sarah Holden and Peter Brady).
Prior to joining the Institute, Mr. Hadley was an associate at Covington & Burling LLP, where he advised clients on a broad range of employee benefit plans and executive compensation arrangements, provided expert advice on ERISA litigation, and assisted with pension and benefits issues in mergers, acquisitions, and other corporate transactions.
Mr. Hadley received his JD from the University of Virginia, where he was Notes Editor of the Virginia Law Review. He was a law clerk for the Honorable Gerald Tjoflat, U.S. Court of Appeals for the Eleventh Circuit. He received his BA, cum laude, from the College of William and Mary.
Effective August 1, Michael Hadley will join the law firm Davis and Harman LLP as a partner in the firm’s …
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About Groom Law Group, Chartered
Groom Law Group, Chartered (www.groom.com) is the premier employee benefits law firm in the United States with over 50 attorneys dedicated solely to the practice of employee benefits law. Groom provides clients with cost-effective, creative, and practical solutions to sophisticated benefits and tax law challenges. The Firm’s national client base includes a diverse group of major corporations, financial institutions, health insurers, trade associations, governmental, and tax-exempt organizations.
About Bracewell & Giuliani LLP
Bracewell & Giuliani LLP (www.bgllp.com) is an international law firm with more than 470 lawyers in Texas, New York, Washington, D.C., Connecticut, Seattle, Dubai, and London. We serve Fortune 500 companies, major financial institutions, leading private investment funds, governmental entities and individuals concentrated in the energy, technology and financial services sectors worldwide.
About Fiduciary Benchmarks
Fiduciary Benchmarks is recognized as one of the industry’s leading services for benchmarking retirement plans. Started in 2007 by several industry experts, the company now has over 1400 of the most respected industry service providers committed to using their service. These professionals represent more than 40,000 plans. The company provides independent, comprehensive and informative benchmarking services through advisors/consultants, record keepers, and other plan service providers.
About Grant Thornton LLP
About Davis and Harman LLP
Reed Smith is a global relationship law firm with more than 1,600 lawyers in 22 offices throughout the United States, Europe, Asia and the Middle East. Founded in 1877, the firm represents leading international businesses, from Fortune 100 corporations to mid-market and emerging enterprises. Its lawyers provide litigation and other dispute resolution services in multi-jurisdictional and other high-stakes matters; deliver regulatory counsel; and execute the full range of strategic domestic and cross-border transactions. Reed Smith is a preeminent advisor to industries including financial services, life sciences, health care, advertising, technology and media, shipping, energy trade and commodities, real estate, manufacturing, and education. For more information, visit reedsmith.com.