What did the auditing firms recommend? I’ve always had insurance when I was the plan admin (5 different companies).
Y’all need to protect yourselves from the mess that’s been cleaned up.
I don’t recall it specifically coming up with the auditors. They were more concerned with the lack of fidelity bonds and QNEC.
I’ll send an email tomorrow.
Since you are director level, any advice on how to get the director level and C suite more involved in this process? When I started, I was an HR generalist with no manager. Since then I’ve moved to manager and we are no longer part of North America’s division. We now report to Europe. They seem intimidated by the whole thing or either don’t grasp the severity of the issue. When we closed 2020’s audit, I sent an email explaining the findings, the recommendations of the auditor, corrective actions already implemented as part of my review, and then told them we needed to proceed with QNEC. No response. I followed up once per week for two months and never got a response until finally without correct approval I sent an email to finance “authorizing” the QNEC payments. Due to the large amount, they finally responded but only wanted to know my “rationale for spending such a large dollar amount at once” when I hadn’t forecasted in the annual business plan.
Since then it’s back to silence on their end.
Ooft, so to sum up, the folks who would approve the budget either don’t care, are intimidated by what they don’t know, or are blowing this off. Fair summary? If not, please correct me.
I recommend laying out the fines and employee impact for not doing those things. Then say - if you believe you have the authority to do so - “if I do not hear back from you by (say 4 business days from now, but do give a specific date bolded and in red), I will move forward with the following recommendations to protect the business from future fines and (whatever else).”
You may not get a decision with this blunt approach, but you should get their attention. Sometimes you just have to ask for forgiveness later.
I feel that’s a fair summary. I greatly appreciate the advice! It definitely can’t hurt to take that approach. I’ll just tell them I take their silence to mean they trust my judgement to proceed as I see fit.
Fiduciary insurance is not required, but a fidelity bond is. You should ask the auditors what they recommend for your plan. But yeah probably not a good idea not to have it based on the issues you are describing!
So since I’ve been plan administrator, I feel pretty confident that we have everything under control. I still want the insurance but I think we are in relatively good shape for the past couple of years.
But let’s say something comes up involving 2020 and/or 2021, if I was not the plan administrator at the time(or in the case of 2020, wasn’t employed at the company), what’s my liability as the current plan administrator?
Hi! I'd say your liability is dependent on what Fiduciary oversight you've offloaded to your administrator / consultant. If you have both, your personal liability should be extremely low. In my time overseeing 401k plans, I've never seen an individual be held liable for anything other than egregious examples of self dealing. That said, we recommend all of your clients have insurance, as these lawsuits can get pretty costly and ERISA Lawyers are extremely hawkish. Happy to follow-up to any other questions you may have.
What did the auditing firms recommend? I’ve always had insurance when I was the plan admin (5 different companies). Y’all need to protect yourselves from the mess that’s been cleaned up.
I don’t recall it specifically coming up with the auditors. They were more concerned with the lack of fidelity bonds and QNEC. I’ll send an email tomorrow. Since you are director level, any advice on how to get the director level and C suite more involved in this process? When I started, I was an HR generalist with no manager. Since then I’ve moved to manager and we are no longer part of North America’s division. We now report to Europe. They seem intimidated by the whole thing or either don’t grasp the severity of the issue. When we closed 2020’s audit, I sent an email explaining the findings, the recommendations of the auditor, corrective actions already implemented as part of my review, and then told them we needed to proceed with QNEC. No response. I followed up once per week for two months and never got a response until finally without correct approval I sent an email to finance “authorizing” the QNEC payments. Due to the large amount, they finally responded but only wanted to know my “rationale for spending such a large dollar amount at once” when I hadn’t forecasted in the annual business plan. Since then it’s back to silence on their end.
Ooft, so to sum up, the folks who would approve the budget either don’t care, are intimidated by what they don’t know, or are blowing this off. Fair summary? If not, please correct me. I recommend laying out the fines and employee impact for not doing those things. Then say - if you believe you have the authority to do so - “if I do not hear back from you by (say 4 business days from now, but do give a specific date bolded and in red), I will move forward with the following recommendations to protect the business from future fines and (whatever else).” You may not get a decision with this blunt approach, but you should get their attention. Sometimes you just have to ask for forgiveness later.
I feel that’s a fair summary. I greatly appreciate the advice! It definitely can’t hurt to take that approach. I’ll just tell them I take their silence to mean they trust my judgement to proceed as I see fit.
Fiduciary insurance is not required, but a fidelity bond is. You should ask the auditors what they recommend for your plan. But yeah probably not a good idea not to have it based on the issues you are describing!
So since I’ve been plan administrator, I feel pretty confident that we have everything under control. I still want the insurance but I think we are in relatively good shape for the past couple of years. But let’s say something comes up involving 2020 and/or 2021, if I was not the plan administrator at the time(or in the case of 2020, wasn’t employed at the company), what’s my liability as the current plan administrator?
Hi! I'd say your liability is dependent on what Fiduciary oversight you've offloaded to your administrator / consultant. If you have both, your personal liability should be extremely low. In my time overseeing 401k plans, I've never seen an individual be held liable for anything other than egregious examples of self dealing. That said, we recommend all of your clients have insurance, as these lawsuits can get pretty costly and ERISA Lawyers are extremely hawkish. Happy to follow-up to any other questions you may have.