Feds Tell Employers: Don’t Ignore Pension, 401(k) Laws

By Charles E. Nye, Partner

COLUMBUS, OH — Company CEOs and presidents, take notice.

Your company’s pension or 401(k) plan may not be in full compliance with federal regulations if your plan fiduciaries are not living up to the spirit and intent of ERISA, the landmark federal law that governs all private sector pension plans.

That strong message was delivered to owners and managers of medium-sized companies at a U.S. Department of Labor seminar held here in late-July, as part of the DOL’s “Getting It Right—Knowing Your Fiduciary Responsibilities” employer education campaign which began in May.

ERISA is the Employee Retirement Income Security Act.

Fiduciary responsibility

A DOL investigation discovered a lack of understanding among many employers regarding their responsibilities to pension and 401(k) plan participants, with a subsequent increase in litigation.

“It is more important than ever for CEOs to be aware of, and pay attention to, pension plan governance, especially the liability of fiduciaries,” says Labor Secretary Elaine L. Chao.

“We want to educate people about the law and help prevent problems from occurring in the first place,” Chao says.

For employers, “Getting It Right...” means:

• Understanding all responsibilities under the law;
• Carefully selecting and monitoring service providers;
• Avoiding prohibited transactions or activities that do not directly benefit plan participants;
• Making appropriate disclosures to plan participants.

DOL officials acknowledge that “Getting It Right...” can be challenging for employers whose time, resources, and access to professional benefit plan help is limited.

However, federal regulations actually encourage pension and 401(k) plan sponsors to hire an independent Registered Investment Advisor—such as Midwest Investment Management—to share the fiduciary responsibility for selecting and managing investments of the plan. That action, when executed properly, can help avoid conflicts of interest of the type implicated in the collapse of several major pension plans and the recent mutual fund scandals.

Meets the definition

Because Midwest Investment Management is registered with the Securities and Exchange Commission as an independent Registered Investment Advisor and does not operate its own mutual funds or receive any fees or compensation from mutual funds, it meets the DOL’s definition of an “independent investment advisor.”

Our Best Funds™ 401(k) investment advisory service is especially well-suited for closely held companies. It offers a wide choice of nationally recognized mutual funds, plus our premier, proprietary portfolio of “value-oriented” stocks.

Our service is comprehensive and our manage-ment fee is very competitive.

If you are a company owner or CEO with a pension or 401(k) plan, I invite you to contact me for a discussion of the advantages our experience as an independent, experienced, and proven investment advisor can provide to your plan. I can be reached at (216) 830-1127 or cen@mimllc.com