Benefit
Plans Administrative Services Inc. (BPAS) released a program that aims to help
terminated employees continue repaying loans after separation from service.
Under the MyPlanLoan Continuation Program, terminated
participants have the ability to continue repaying their loan under the
original terms, avoiding significant tax penalties associated with a default.
BPAS handles all billing, payment processing and administrative functions –
receiving monthly payments directly from participants, and depositing payments
to each participant’s plan account.
The service is also available for the loans of active
participants and the conversion of existing loans – providing flexibility while
allowing human resources to exit the business of loan
administration.
“This automated process eliminates the headaches of loan
administration. It allows loans to be repaid more quickly and can boost
overall plan participation,” said Barry S. Kublin, president of BPAS. “Our
prudent loan program allows plan sponsors to set loan limits below 72(p),
preventing employees from borrowing more than they should, and protecting
retirement savings. It’s a solution that benefits everyone.”
The MyPlanLoan Continuation Program is available for
retirement plans administered by BPAS. The entire MyPlanLoan program is
available to third-party administrators and retirement service providers as a
standalone service, with BPAS providing all back-office support
functions.
For more information about MyPlanLoan, contact Gwenn Paness,
sales director, at (646) 285-4937 or gpaness@bpas.com.
Sponsors Still Need Help After Fee Disclosure Deadline
Although the 404(a)(5) participant fee disclosure deadline
has passed, advisers continue to play an important role in helping plan
sponsors and participants understand fee disclosure statements.
According to the 2011 Deloitte 401(k) Benchmarking Survey,
one-third of plan sponsors are unfamiliar with the new fee disclosure rules.
When participants receive their third-quarter statements reflecting this
disclosure information, plan sponsors may have difficulty explaining the
numbers.
Although many participants will not read their statements,
at least one employee from each company will, Bob Kaplan, vice president,
national training consultant at ING Investment Management said during an ING
retirement perspectives webcast, “Five Things Advisors Must Remember About
Participant Fee Disclosure.” The webcast outlined several action points for
advisers to help sponsors in the aftermath of the participant fee disclosure
deadline:
Kaplan’s first tip is to manage plan sponsor expectations.
Plan sponsors and advisers should work together to ensure participants do not
dwell on fees and, as a result, forget why they are saving in the first place,
he said.
In addition to preparing participants for disclosure
information, advisers should evaluate the services they are providing to
sponsors and participants. “When the service is there, fees are not really an
issue,” Kaplan said.
Address Participant
Confusion
According to Kaplan, a “staggering” number of participants do not know they pay
fees. Callan’s 2012 Defined Contribution Trends
Survey found that participant confusion is the chief concern among plan sponsors
regarding 404(a)(5).
“These fees may not
be new, but they are being shown in a different format,” Kaplan said.
To clear up confusion, advisers should offer to meet with
participants and educate them on fees. Now is the time for advisers to prospect
plan sponsors who are not receiving participant disclosure help from their
current advisers, he added.
Explain Fees and
Services
Advisers should remind sponsors that cheaper plans are not
necessarily the solution because less expensive may equal less service. During
this time in particular, advisers should help clients understand the value they are bringing
and why the fees are justified, Kaplan said.
During each annual review, advisers should present to
sponsors a checklist of services they performed. “That will be a strong defensive
move,” Kaplan noted, should a new adviser prospect the client.
Help Sponsor Piece it
Together
Sponsors may need a little hand-holding from the adviser,
who can provide them with benchmarking tools.
The decisions the sponsor makes – for example, what adviser or
provider to work with – must be documented. “Let the plan sponsors know that a
very important part of this is documentation, documentation, documentation,”
Kaplan said.
Ensure Brokerage
Windows Are Not Broken
Kaplan cautioned that plan sponsors should be aware that a
plan without designated investment alternatives (DIAs) could be suspicious to
the Department of Labor (DOL).
“The problem is not with having brokerage windows,” Kaplan said. “The problem is not providing enough information about them.”
Brokerage windows must be listed on all participants’
statements, regardless of the small number who use them. In its revised Field
Assistance Bulletin (FAB) No. 2012-02R, the DOL said that “… in the case of a
401(k) or other individual account plan covered under the regulation, a plan
fiduciary’s failure to designate investment alternatives, for example, to avoid
investment disclosures under the regulation, raises questions under ERISA
section 404(a)’s general statutory fiduciary duties of prudence and loyalty” (see
“DOL
Issues Clarification to Participant Fee Disclosure Guidance”).