Sponsors of the 401(k) plans (and the company officials charged with the responsibility of managing them) have significant obligations under the Employee Retirement Security Act (ERISA). Those duties include the prudent selection and monitoring of service providers and the investment options offered to the participants, and they have been referred to as the highest duties known to the law. Expanding on these obligations, the Department of Labor (DOL) is in the process of finalizing new disclosure regulations that will require 401(k) plan fiduciaries to engage in the heightened level of review of service provider arrangements and to ensure that significantly enhanced disclosures related to investment options, fees and other subjects are being made to the participants. While some of these fiduciary duties may be delegated to others, the plan sponsor retains the ultimate responsibility - and potential liability if something goes wrong - for operating the plans in the best interest of the participants.
In light of these expanding regulatory requirements, plus increased 401(k) plan fee and fiduciary litigation, small and mid-sized employers - as well as their advisers - may be looking for options to provide their employees with the benefits of a well-managed 401(k) plan while reducing their administration burdens and mitigating fiduciary risk. One approach that is gaining wider acceptance among both plan sponsors and their advisers is the "open" multiple employer 401(k) plan - a single plan sponsored by an independent plan sponsor that covers the employees of a number of unrelated employers, with a centralized administrative and fiduciary structure.
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