Plan sponsors have loads to think about when it comes to theretirement plans they offer employees. And just because they'resupposed to know the latest rules doesn't mean they actually heedthem.

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In a Sunday NAPA 401(k) Summit workshop, Pam O'Rourke ofIntegrated Retirement Initiatives, Jason C. Roberts of the PensionResource Institute and Trent V. Sanden at UBS InstitutionalConsulting offered plan advisors some tips on how to ensure theirsponsor clients steer clear of trouble.

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Here are five you should be aware of, so that you can keep yourown clients safe:

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1. Investment choices

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Plan sponsors undoubtedly have some idea that they have to makegood investment choices for plans, but they may not know a goodinvestment choice when they see one. Or they may know they have toprovide an appropriate qualified default investment alternative(QDIA), but not realize which criteria make a QDIA appropriate orinappropriate for their particular plan participants. For thatmatter, does their investment policy statement even addressQDIAs?

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In addition, some of the factors plan sponsors may not beconsidering are such things as participant risk tolerance, thelikelihood of participants taking loans or withdrawals, or whethertheir participants will even look at a slate of investment choicesor simply go with the default, even if it's not suitable for theirparticular needs.

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According to the presenters, you should make sure that “(w)henfiduciaries lack investment-related expertise, they are required tohire professional assistance (e.g, investment education, adviceand/or management).” And, yes, you might have to give them a nudgein the right direction.

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2. Hiring experts

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OK, so plan sponsors know they have to hire someone to help themout. Do they know how to choose an expert? What should they lookfor, and how much should they pay? Are there benchmarks they canlook for, and do they know what those benchmarks are? Can theyjudge impartiality? Advisors may need to point them toward sourcesof data that can help them make up their minds.

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For that matter, can they judge whether their experts arerecommending options that cost more to participants than they needto? What determines whether a cost is fair, and where should theygo to find out?

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3. Oveseeing the plan (a.k.a. Administration,Part 1)

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When overseeing the plan itself, some of the sponsors'responsibilities include making sure that policies are in placecovering loans and distributions and making sure that contributionsare successfully deposited according to plan rules andparticipants' designations.

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Advisors may want to make sure that their sponsor clients knownot only that policies are in effect, but what those policies areand who is responsible for carrying them out. Who decides whetherto approve loans or withdrawals? What are the reasons for approvalor denial?

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4. Reporting (a.k.a. Administration, Part2)

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Fiduciaries not only have to make sure that the plan isadministered properly, they also have to make sure that allrelevant paperwork is sent to participants and toregulators.

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Sponsors should know not only which reports, notices, forms anddisclosures are required, but also who is responsible for preparingthem, when they must be prepared and sent, to whom they must beprovided and when (or how often).

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And sponsors shouldn't forget to look to their ownrecordkeeping. Who is responsible for having copies of allpertinent paperwork in the files?

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5. Service providers

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Choosing service providers isn't a set-it-and-forget-it process.While sponsors have to consider a wide range of factors in theinitial selection process, they can't just go about their businessonce a provider is in place and assume that everything will befine.

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Taking into account participant needs, whether participants aresatisfied with the plan and actually use its services (education,automation, website features, etc.) is part of the selectionprocess, but also part of the ongoing review of how a provider isperforming. It won't do any good to choose a provider known for awhiz-bang website if a sponsor's particular group of participantsnever goes near the Web — nor will it help if the providerruns in-person classes filled with information that putparticipants to sleep instead of educating them. Maybe the providerhas great experience, but not with a particular worker segment andthus fails to understand and accommodate its needs.

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Then there are the questions of how the provider is compensated,whether compensation is reasonable considering the provider'sexpertise and the size of the plan and whether there are potentialor actual conflicts-of-interest that could influence the provider'sjudgment.

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Plan sponsors must not only stay on top of all these factors andmore, but must keep records of the factors they considered whendeciding whether to choose, replace or retain a provider.

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