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Employers Find Ways To Mitigate Liability On 401(k)s

It’s time to take more responsibility for your 401(k) plan.
 
In the current economic environment, employees are blaming their employers for losses in 401(k) accounts. Many businesses have been accused of failing to meet their fiduciary responsibilities. High plan fees, poor communication and education, and lack of investment options all have come under fire, and there have been a rash of lawsuits against plan providers.
 
A recent survey by management consultant Hewitt Associates shows that employers have acted to improve their plans and protect themselves against such litigation. Almost seven in 10 respondents said they were very or somewhat likely to increase efforts to explain their 401(k) plans’ fees, and 60% were very or somewhat likely to review their plan’s governance structure. And more than half said they were very or somewhat likely to benchmark their plans against industry “best practices” in 2010.
 
One way to demonstrate you have acted properly in your employees’ interest is to document the processes for meeting your responsibilities. Giving participants greater control over their investment decisions can also limit a fiduciary’s liability. That means letting workers choose from a broad range of investment alternatives.
 
Finally, communication remains crucial. Make sure your employees all of their rights and responsibilities under the plan.

This article was written by a professional financial journalist for Legend Financial Advisors, Inc. and is not intended as legal or investment advice.




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