If your company offers a retirement plan, the federal government says you must retain a "fiduciary responsibility" over those employee accounts.
What's new? A rash of high-profile financial and
That doesn't mean you must guarantee that employees will always see profits flow into their accounts. But it does mean you must offer an appropriate mix of investments, handle the paperwork correctly and educate employees on their investment options and potential risks.
Some employers choose to handle those responsibilities on their own, while others hire a
Whichever you choose, don't assume that employees know much. In a recent Merrill Lynch survey, only half of those responding said they felt very knowledgeable about selecting investment options in an employer-sponsored retirement plan.
How much education is enough?
About 52 percent of employers now provide investment advice to their employees, according to the Profit Sharing/ 401(k) Council of America. Still, the issue confuses employers about exactly how much and what types of information plan sponsors can (or must) provide.
Your goal: to help employees make better-informed decisions about their investments in the most legally safe way. Experts say you're risk-free 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 fi-nancial concepts, such as diversification, risk and return.
• Model portfolios showing different asset allocations.
• Access to performance data of various investments offered.
• Work sheets, questionnaires and interactive software to help employees personally estimate retirement income needs and the effect of different investing scenarios.
Final tips: A qualified lawyer should review your plan. Also, consider fiduciary liability insurance to protect you in case a worker sues.
Online Resources: Retirement plan liability
Employee education tools. To view materials and interactive tools you can use to educate employees, visit www.401k.org.
Compliance help. For advice on meeting your federal benefit-plan responsibilities, visit www.dol.gov/ebsa/compliance_assistance.html.
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