Issue: If your organization offers a retirement plan, it has a legal responsibility for those accounts.
Risk: A rash of financial andscandals has sparked new legal and regulatory scrutiny of retirement plans.
Action: Educate employees about their investment options in a legally safe way. Read the following to learn how.
Employees watching the wave of recent corporate scandals have been quick to blame their employers for poor-performing retirement plan investments.
Your organization isn't required to guarantee employees that nonstop gains will flow into retirement accounts. But you do have a "fiduciary responsibility" to offer a mix of appropriate investments, handle paperwork correctly and educate employees on their investment options and potential risks.
Some companies handle education duties on their own; others hirefirms. Experts say you're legally safe if you provide information to employees on:
- General benefits of participating in the plan and increasing contributions.
- The negative impact of early withdrawal on savings.
- General investment and financial concepts, such as diversification, risk and return.
- Model portfolios showing different asset allocations.
- Access to performance data of various investments offered.
- Work sheets, questionnaires or interactive software to help employees estimate their retirement income needs and the effect of different investing scenarios.
Online resources: To view materials and interactive tools you can use to educate employees, visit www.401k.org. For advice on meeting your federal benefit-plan responsibilities, visit www.dol.gov/ebsa/ compliance_assistance.html.