Small Business 401(k) Blog

The Frugal Fiduciary Small Business 401(k) Blog

Get the latest industry news, deadlines and tips you need to know to help tackle your fiduciary responsibility needs.

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Provider Shopping | Thought Leadership | Fiduciary Responsibility

Don’t Be Fooled by These 401(k) Conflicts of Interest!

By: Eric Droblyen
April 13th, 2022

401(k) conflicts of interest misalign the interests of employers and 401(k) providers. While employers have a fiduciary responsibility to choose a 401(k) provider with “reasonable” administration fees and cost-efficient investments to make retirement as affordable as possible for plan participants, conflicted 401(k) providers have a financial incentive to push overpriced administration services and investments when lower-priced - but otherwise comparable - alternatives are available. How do conflicted 401(k) providers get away with it? Often by spinning a conflict as a benefit.

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401(k) Fees | Provider Shopping | Fiduciary Responsibility

Five Reasons Why Hidden 401(k) Fees Should be Illegal

By: Eric Droblyen
March 16th, 2022

Cost matters a lot when saving for retirement. When paid from plan assets, 401(k) fees reduce the account returns of plan participants dollar-for-dollar. Over decades, these losses can cost a 401(k) account hundreds of thousands of dollars in lost compound interest. Given the stakes, employers have a fiduciary responsibility to pay only “reasonable” 401(k) fees from plan assets. When this responsibility is not met, business owners can be held personally responsible for restoring excessive fee payments.

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401(k) Plan Design Checklist

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Subscribe to the The Frugal Financial Small Business 401(k) Blog and receive this free checklist for help in determing the best 401(k) plan design options and fit for your company.

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Thought Leadership | Fiduciary Responsibility

401(k) Fiduciary Takeaways from a Jerry Schlichter Interview

By: Eric Droblyen
March 2nd, 2022

Recently, I listened to an insightful interview of Jerry Schlichter by Rick Unser of the 401(k) Fridays Podcast. In 2006, Jerry was the first private attorney to file lawsuits alleging excessive fees in 401(k) and 403(b) plans. Since then, his firm - Schlichter Bogard & Denton - has won more than $600 million in settlements on behalf of plan participants. He’s also won the only two 401(k) fee cases ever heard by the U.S. Supreme Court - Tibble v. Edison and Hughes v. Northwestern University. I consider the Jerry Schlichter interview a must-listen for 401(k) plan fiduciaries.

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Investments | Thought Leadership | Fiduciary Responsibility

Hughes v Northwestern: What is a "Prudent" 401(k) Investment?

By: Eric Droblyen
February 2nd, 2022

Last week, the Supreme Court of the United States (SCOTUS) issued their highly-anticipated Hughes v. Northwestern University decision. In a unanimous opinion, the court reaffirmed – as articulated in Tibble v. Edison International – that 401(k) fiduciaries have an obligation under ERISA to continuously “monitor” their plan’s investment menu and to remove any imprudent investments timely. A lower court - the 7th U.S. Circuit Court of Appeals - had dismissed case in 2020, suggesting that 401(k) fiduciaries could shield themselves from claims of imprudent investment selection by offering a diverse investment menu. SCOTUS returned the case to the 7th Circuit for reconsideration.

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Testing | Fiduciary Responsibility

401(k) Nondiscrimination Testing Study – What % of Plans Fail?

By: Eric Droblyen
January 19th, 2022

401(k) plans must pass certain IRS-mandated nondiscrimination tests annually to confirm Highly-Compensated Employees (HCEs) do not disproportionately benefit and that no plan participant exceeded certain contribution limits. Often, these tests are completed as soon as possible following a year-end so correction and deduction deadlines are not missed. For calendar-based 401(k) plans, that means now.

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Provider Shopping | Fiduciary Responsibility

401(k) Annual Administration - A Checklist for 2022

By: Eric Droblyen
December 8th, 2021

401(k) plans are popular today because they offer generous tax benefits to employers and employees. However, to qualify for these benefits, 401(k) plans must complete a myriad of plan administration tasks each year. It’s ultimately up to employers to ensure each task is completed timely. Meeting this important fiduciary responsibility can seem overwhelming, but it doesn’t need to be. The key is hiring a 401(k) provider that’s willing and able to do three things - 1) summarize all required tasks, 2) complete the more difficult and time-consuming ones, and 3) provide straightforward guidance for the rest.

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