How Do You Spell R-E-L-I-E-F? By: Thomas ZamiaraAIFA® 2012.10.03

Remember the old commercial, “How do you spell relief? R-O-L-A-I-D-S."  Sound familiar?

I spend a lot of my time with employers who are diligent and earnest about providing above average benefits to their employees.  Included in this effort is sponsoring a retirement plan designed to encourage employees to participate fully, to save adequately for retirement, and to retire satisfied.  Even those employers who provide only modest company contributions, are adamant both employee and employer contributions are deposited in what they have determined to be desirable investments. 

Besides vetting worthwhile investment options, employers or what we call in the industry, plan-sponsors, have over the past few years been examining the costs associated with managing and maintaining these plans and their investment options.  Some of this motivation certainly has come from the heightened awareness created by a slew of class-action suits brought against employers because it was alleged they, the plan sponsors, were negligent in their duty to “defray” the reasonable expenses associated with the plans.  Still other employers have been moved to look at costs more closely as the new Department of Labor (DOL) regulations (commonly referred to as 408(b)(2)) kicked-in on July 1st after nearly an 18 month roll-out.  Yet other employers examine and discuss fees and expenses because they always had.  These plan sponsors have faithfully embraced the central tenant of fiduciary responsibility; which is to “act exclusively on behalf of participants and their beneficiaries and defray the reasonable expenses of the plan”.

Other than the third group of employers I’ve referred to, the other two are ‘reactionaries’, responding to a prodding they get from some event or occurrence.  Waiting for the accident to happen rather than work toward preventing it is unfortunately more common among employers.  I hear all the time, “we know this issue is important, but honestly, if it’s not on fire, it doesn’t get my attention.”  This approach is like saying; 'I’ll wake up the neighbors and organize a search party when the horse gets out of the barn.'  Wouldn’t it be much easier to simply repair the latch or buy a better lock?

With the onset of 408(b)(2), employers are going to have to gear up for the requirements and behavior expected of them regarding their response to these disclosures. 

So, how do you spell relief?  I would suggest P-R-O-C-E-S-S. 

As an investment fiduciary to your plan, discuss with your Committee what is required under the regulations and what actions you believe are necessary and are going to take.  If confused, and believe me there is a great deal of confusion surrounding these regulations, seek outside help.  Consult with your ERISA counsel, ask your consultant, or ask your recordkeeper for names of consultants who may be able to help with this. 

Audit firms will be digging into these disclosures and asking you some tough questions during the next plan audit.  Be ready: have a plan of action, fix the latch, buy a better lock, but do something.  If you do nothing and simply wait, you WILL be waking up the neighbors, scheduling meetings to organize the search, creating charts, and a lot of other wasteful nonsense.  You and your staff will consume valuable time and energy to fix this.  Meeting to fix the latch or sending someone to buy a new lock is a whole lot easier!

So, how should you spell relief?  P-R-O-C-E-S-S.

If you’re interested in additional steps to create relief, please feel free to contact me at

Thomas F. Zamiara

Founding partner of Westminster Consulting, Tom serves corporate, non-profit and foundation clients.

An avid sports enthusiast and fan at his sons’ sports events, Tom is a longtime fan of the University of Notre Dame. Tom has been associated with St. Peter’s Soup Kitchen in Rochester, NY for decades...

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