401K Plans have traditionally been used as incentives to lure and keep employees. They have become increasingly popular with large corporations as well as small, to mid-size businesses. However, the Supreme Court is looking more closely at corporate 401K plans. The end result could be more profitable for the participating employees and a potential sticking point for employers.
The reason the Supreme Court is looking into two separate cases regarding 401K plans is to determine the responsibility employers have to provide good plans. For instance, there are many different share classes, some of which are far too expensive and may not offer employees the most beneficial return on their investment. Most employers, once they’ve signed off on a company 401k plan, will rarely, if ever review that plan again. Even though the economy goes through its ups and downs, no one is monitoring the 401k to determine whether or not it is up to snuff.
There are specific rules that must be followed and the Supreme Court is looking deeper into the fiduciary responsibility of employers to make certain the employees are being served as best as possible by the company plan.
If you own a business, the prudent thing to do even before the Supreme Court reaches its decision, is to start getting an independent analysis of your company’s plan. Look into the fee structure to make sure it is fair. Look into the share classes. In most cases, your company hasn’t considered the status of your 401k Plan in 10 to 15 years.
In addition, if the office manager is the one responsible for selecting the 401k, they could be considered the fiduciary and could be held accountable even though they do not own the business.
Start the evaluation of your company 401k Plan as soon as possible! You could avoid serious fiduciary problems as a result of the Supreme Court cases and could end up being of greater benefit to your employees.
Forest Hills Financial Inc.