The 401(k) and Pension Plan Minefield:
Are You Ready?

03/05/07

You probably know that a retirement plan is needed if you want to recruit and retain quality employees. If you already have one, or are about to select a plan, there’s a lot to consider.

Your fiduciary duty

Offering a financial plan to your employees results in a fiduciary duty, frequently defined as "an obligation to act in the best interests of another party." Since your company is acting on behalf of its employees in important financial matters, you are forbidden legally from acting in any manner considered to be inconsistent with the interests of your employees. Therefore, complete disclosures to your staff are necessary.

What to choose

In addition to evaluating a pension plan vendor’s expenses, investment options and service, you should assess index and lifestyle portfolios to ensure they provide reasonable risk and fees. As a result, investment program issues are hopefully minimized, helping to shelter your company from potential liability.

Remember, your best defense against liability is accurate and complete information, research and careful plan selection.

June 2005