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Who’s Running Your Employee Retirement Plan?

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By Brian Urie, Retirement Plan Advisor at LPL Financial

When you first decided to offer a 401(k) plan to your employees, did you know that you were, in essence, opening a second business? Your primary business has many stakeholders—customers, suppliers, employees, the community and you, the primary shareholder. Your other business, your 401(k) plan, also has stakeholders—your employees and their beneficiaries.

Once you’ve decided how to design the plan to address the objectives of your primary business, every decision going forward must be made in the best interests of these stakeholders. This is what it means to be a fiduciary; you put personal interests aside and do what you think is best for your employees and their beneficiaries.

Much like your primary business, your 401(k) plan has the following roles and responsibilities:

  • Chief Executive Officer (CEO)—referred to as Plan Sponsor in the adoption agreement. This is you, the owner, the person providing the plan. While you may delegate certain roles and responsibilities to others, you, ultimately, retain liability for plan decisions.

  • Chief Financial Officer (CFO)—referred to as Trustee in the adoption agreement. This person is responsible for funds going in and coming out of the plan. Anyone given access to paycheck withholdings and plan assets must be bonded in the amount of 10% of the 401(k) plan assets (up to certain limits depending on the type of plan).

  • Chief Operating Officer (COO)—referred to as the Administrator in the adoption agreement. This person makes sure that the 30+ administrative tasks to keep your plan in compliance are completed each year. These tasks can range from a voluntary correction with no fees or fines to returning all contributions to employees, where the employees would be responsible for any taxes owed.

  • Chief Investment Officer (CIO)—referred to in the financial industry as Investment Fiduciary. This person (or, in some cases, committee) selects and monitors the investments available in the 401(k) plan. Within the last few years, regulators have offered safe harbors, like 404(c) and QDIA, against the liability that plan fiduciaries face if employees lose money in their retirement accounts.

Just like any company, these roles and responsibilities can be performed by one person, or by many. These responsibilities, depending on the time and expertise available in your organization, can be retained, shared or delegated to outside professionals by the CEO, or Plan Sponsor. In fact, if your organization lacks the necessary expertise, the Employee Retirement Income Security Act (ERISA), requires you to hire professional assistance.

LPL Financial at Mountain America Credit Union has a dedicated retirement plan advisor with specialized training to help you run this second business and make it a benefit to your primary business, not a liability. Call 800-540-7670 for a complimentary review.

*This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

**Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Mountain America Financial Services and Mountain America Credit Union are not registered broker/dealers and are not affiliated with LPL Financial. The investment products sold through LPL Financial are not insured Mountain America Credit Union deposits and are not NCUA insured. These products are not obligations of the Mountain America Credit Union and are not endorsed, recommended or guaranteed by Mountain America Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

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