Operating in compliance. understanding irs and dol audit hot button issues and how to address them 9-20-18 ce
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OppenheimerFunds provided a presentation on understanding ERISA fiduciary responsibilities and common IRS and DOL audit issues for plan sponsors. The presentation covered fiduciary roles and responsibilities under ERISA, consequences for failing to meet fiduciary duties, an overview of the IRS and DOL enforcement frameworks, common plan failures identified in IRS audits such as failing to timely update plan documents or operating inconsistently with plan terms, and hypothetical case studies demonstrating how to correct for common errors like excluding eligible participants. The presentation aimed to help plan sponsors address common audit issues and ensure compliance with their fiduciary obligations.
Operating in compliance. understanding irs and dol audit hot button issues and how to address them 9-20-18 ce
- 1. OppenheimerFunds is not undertaking to provide impartial investment advice or to provide advice in a fiduciary capacity. Operating in Compliance VP and Senior Associate General Counsel OppenheimerFunds Understanding IRS & DOL Audit Hot-button Issues & How Plan Sponsors Can Address Them The financial advisor indicated above is not employed by OppenheimerFunds, Inc., or any subsidiary and his or her firm are not subsidiaries of OppenheimerFunds, Inc. Products offered through OppenheimerFunds.
- 2. 2 Agenda ERISA is a highly complex area of law. The information contained in this material is strictly educational in nature and is not intended as legal advice. Clients are strongly encouraged to obtain legal advice from a qualified expert. IRS & DOL enforcement update IRS & DOL audit “hot buttons” & case studies 401(k) plan check-up tools Support network Litigation update
- 3. What are your ERISA Fiduciary responsibilities?
- 4. 4 • Acting solely in the best interests of the plan participants (and their beneficiaries) • Carrying out duties prudently • Diversifying investments • Following the terms of the plan documents • Paying only reasonable plan expenses • Monitoring for prohibited transactions • Responding to inquiries • Being “bonded” (Fidelity Bonds) What Are A Plan Sponsor’s Fiduciary Responsibilities?
- 5. 5 Who Is a Fiduciary? Fiduciary Roles and Responsibilities Employer Every plan must have at least one fiduciary Trustee Plan assets must be held in a trust or in a custodial account unless the plan is funded exclusively with insurance contracts Plan Administrator (ERISA 3(16)) Plan sponsor is typically named the ERISA 3(16) plan administrator Responsible for the day-to-day administrative decisions. The Plan Administrator has the following primary responsibilities: • Ensure all filings with the federal government (such as Form 5500) are timely submitted • Make important disclosures to plan participants • Hire service providers if no other fiduciary has that responsibility • Fulfill fiduciary responsibilities as set forth in plan documents • Maintain/oversee day-to-day plan operations
- 6. 6 Who Is a Fiduciary? Fiduciary Roles and Responsibilities Investment Adviser (ERISA 3(21)) Investment adviser who serves as a fiduciary investment adviser under ERISA 3(21). The Plan sponsor shares fiduciary responsibility for plan investment decisions with the Investment adviser. Investment Manager (3(38)) “Investment Manager” takes full discretionary responsibility for selecting and monitoring plan investments
- 7. 7 • Fiduciaries can be personally liable for plan losses • Fiduciaries may be responsible for co-fiduciary breaches • Section 405(a) of ERISA provides that a fiduciary of a plan may be liable for a breach of fiduciary responsibility committed by another fiduciary of the plan: • (1) if he knowingly participates in, or knowingly undertakes to conceal a breach • (2) enables another fiduciary to commit a breach • (3) if he has knowledge of the breach and fails to make reasonable efforts under the circumstances to remedy the breach. What Happens if I Don’t Meet My Fiduciary Responsibilities?
- 8. 8 IRS (Internal Revenue Service) Internal Revenue Code DOL (Department of Labor) ERISA Focus • Fiduciary rules • Participant protections Enforcement Framework Focus • Tax laws & regulations • Plan documents
- 9. 9 Oversees enforcement of ERISA • Fiduciary standards of conduct • Fee transparency • Conflicts of interest • Participant protections Enforcement projects • Employee Contributions Initiative • Major Case Enforcement • Contributory Plans Criminal Project • Plan Investment Conflicts Project The DOL – Employee Benefits Security Administration (EBSA)
- 10. 10 The DOL – Enforcement Results $777.5 million paid to plans, participants & beneficiaries • $352.0 million – plan assets restored/benefits recovered • $9.5 million – Voluntary Fiduciary Correction program 2016 fiscal year enforcement results 2,002 civil investigations 333 criminal investigations Source: Department of Labor Enforcement Results Fact Sheet Fiscal Year 2016, https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource- center/fact-sheets/ebsa-monetary-results.pdf
- 11. 11 Oversees compliance with tax laws • Contributions • Nondiscrimination testing • Distributions • Plan documents Enforcement • Plan audits • Plan document reviews • Voluntary compliance programs Reports results – EP Compliance Trends and Tips IRS – Employee Plans (EP) http://www.irs.gov/Retirement-Plans/EP-Compliance-Trends-and-Tips
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- 13. 13 Develops projects on areas of noncompliance Conducts compliance checks through correspondence or telephone Saves plan sponsor time & money IRS – EP Compliance Unit To date • 70 projects completed • 41,000 compliance checks https://www.irs.gov/retirement-plans/employee-plans-compliance-unit-epcu
- 14. IRS & DOL Audit “Hot Buttons” & Case Studies
- 15. 15 Common Plan Failures IRS Audit “Hot Buttons” Failure to timely update plan documents Failure to operate the plan in accordance with plan terms • Compensation definition • Matching contributions • ADP/ACP nondiscrimination tests • Eligible employees • IRC §402(g) deferral limit • Deferral deposits • Hardship distributions • Loans Source: IRS 401(k) Plan Fix-It Guide, Aug. 27, 2017
- 16. 16 Written plan document required for tax-qualified retirement plan Plan sponsors must amend for required amendments Source: Christy & Swan Profit Sharing Plan v. Commissioner of IRS, T.C. Memo 2001-62 (Mar. 15, 2011) Plan Documents & Amendments Failure to amend plan document can result in • Plan is retroactively disqualified • Tax deductions disallowed • Participants’ plan balances are taxable
- 17. 17 IRS Revenue Procedure 2016-51 Employee Plans Compliance Resolution System (EPCRS) Voluntary Correction Program (VCP) Employer initiated, IRS submission Reduced fee based on number of participants Operational, document, demographic, & employer eligibility errors Audit Closing Agreement Program (Audit CAP) IRS initiated Penalty based on various factors Errors discovered under IRS audit Self-Correction Program (SCP) Employer initiated, no IRS involvement No fee Operational errors PROCESS FEE TYPES OF ERRORS
- 18. 18 Late PPA Restatement Correction Options Corrections options for plans that missed restatement deadline Plan sponsor submits under VCP • User fee applicable, dependent on plan size • VCP submission kit available from IRS Document sponsor submits request for “umbrella” closing agreement • $10,000 fee for first 20 plans Pre-approved defined contribution plans 6-year restatement cycles PPA restatement deadline April 30, 2016 Sources: IRS website, Voluntary Correction Program (VCP) – General Description, September 27, 2017, https://www.irs.gov/retirement-plans/voluntary-correction- program-general-description; New Program Allows Providers of Pre-Approved Plan to Correct Missed Deadlines, February 17, 2017, https://www.irs.gov/retirement- plans/new-program-allows-providers-of-pre-approved-plan-to-correct-missed-deadlines
- 19. 19 Hypothetical Case Study: Facts Employer D 401(k) plan • 8 participants • Plan operates on a calendar-year basis • January 1 & July 1 entry dates Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted. Eligible Participants Excluded Employer matching contribution • 50% matching contribution on deferrals up to 10% of compensation Employee Jack • Should have been given the opportunity to make elective deferrals on January 1, 2016 • Was not provided the deferral opportunity until January 1, 2017 • Is a non-highly compensated employee (NHCE) • Had compensation of $80,000 for 2016 • ADP of NHCEs was 8% Source: IRS Revenue Procedure 2016-51
- 20. 20 Hypothetical Case Study: Correction Employer D must make a corrective contribution for the 2016 “missed deferral opportunity” & the missed matching contribution Eligible Participants Excluded • Additional IRS fees & penalties may apply • Correction amounts add up significantly if eligible errors occur with multiple employees or over multiple years (Jack’s salary earned during period he was excluded) (ADP of NHCEs = 8%) (Missed Deferral) (50% × Missed Deferral) (Corrective deferral contribution by employer = Qualified Nonelective Contribution (QNEC)) (50% match on Missed Deferral = $6,400 × .50) *(Full corrective contribution by Employer D) *The corrective contribution must be adjusted for earnings through the date of the correction CALCULATION:* $80,000 × .08 $ 6,400 × .50 $ 3,200 + 3,200 $ 6,400 Source: IRS Revenue Procedure 2016-51 Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted.
- 21. 21 3 safe harbor correction methods No. 50% is a corrective contribution – not a penalty 3 safe harbor methods require zero or reduced corrective contribution • Correction within 3 months of failure • Correction between 3 months – 2 years of failure • Correction within 9½ months if automatic enrollment feature Eligible Participants Excluded Is the penalty always 50% of missed deferrals? Q A Source: IRS Revenue Procedure 2016-51
- 22. 22 Hypothetical Case Study: Facts Employer Z 401(k) plan • 6 participants in 2016 plan year • Plan definition of compensation for deferrals & employer contributions excludes bonuses • Plan uses unallocated forfeitures to reduce employer contributions Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted. Incorrect Definition of Compensation Employer profit sharing & matching contribution • 5% of compensation profit sharing contribution • 50% matching contribution on deferrals up to 6% of compensation Plan Error • Plan improperly includes bonuses in compensation • 3 HCEs had base compensation of $120,000 & a $30,000 bonus • Each HCE deferred 6% of base compensation ($7,200) & bonuses ($1,800) • Each HCE received a 5% profit sharing allocation on base compensation ($6,000) & bonus ($1,500) • Each HCE received a 3% match allocation on base compensation ($3,600) & bonus ($900) Source: IRS 401(k) Plan Fix-It Guide, October 27, 2017
- 23. 23 Hypothetical Case Study: Correction Employer Z must take corrective actions for the 2016 incorrect definition of compensation Incorrect Definition of Compensation Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted. Source: IRS 401(k) Plan Fix-It Guide, October 27, 2017 For each employee, Employer Z should • Forfeit profit sharing allocations of $1,500, adjusted for earnings – Reallocate forfeited amounts to use for profit sharing allocation in future year • Forfeit matching contributions of $900, adjusted for earnings – Reallocate forfeited amounts to use for matching contribution in future year • Distribute improperly contributed elective deferral of $1,800, adjusted for earnings, to each employee – If earnings are negative, employer must make additional contribution so participants do not suffer financial loss • If eligible can correct using SCP • If not eligible must use VCP & correct with IRS filing & appropriate user fee
- 24. 24 Fiduciary Breaches DOL Audit “Hot Buttons” Failing to • Operate the plan prudently & for the exclusive benefit of participants • Properly value plan assets or to hold plan assets in trust • Follow the terms of the plan • Properly select & monitor service providers Using plan assets to benefit • The plan administrator • The plan sponsor
- 25. 25 DOL Corrections Program Delinquent Filer Voluntary Compliance Program (DFVCP) • Late or inaccurate Form 5500 filings Enforcement objective for IRS & DOL • Form 5500 non-filers • Key goals – Modernize reporting – Improve service provider fee information – Enhance plan compliance https://www.dol.gov/agencies/ebsa/employers-and- advisers/plan-administration-and-compliance/reporting-and- filing/form-5500 Source: 81 Federal Register 140, “Proposed Revision of Annual Information Returns/Reports,” July 21, 2016 New Form 5500 proposed by DOL, IRS & PBGC
- 26. 26 Voluntary Fiduciary Correction Program (VFCP) • Delinquent participant contributions & loan repayments • Payment of excessive or unnecessary compensation • Improper handling of participant loans • Purchase of assets by plans from a “Party in Interest” • Improper payment of expenses by plan DOL Corrections Program https://www.dol.gov/agencies/ebsa/about-ebsa/our- activities/resource-center/fact-sheets/vfcp
- 27. 27 Make Timely Deposits Delinquent participant deposits • Deferrals • Loan repayments Deposit timing rules • General rule – as soon as possible to segregate deferrals from general assets • Small plan safe harbor – Only available for plans with fewer than 100 plan participants – 7 business days Correction resources • VFCP program • Online calculator http://askebsa.dol.gov/vfcpcalculator/webcalculator.aspx Sources: DOL website, Employee Benefits Security Administration, ERISA Enforcement, National Enforcement Priorities, https://www.dol.gov/agencies/ebsa/about- ebsa/our-activities/enforcement; 29 CFR 2510.3-102, Definition of “plan assets” – participant contributions; VFCP Online Calculator, http://askebsa.dol.gov/vfcpcalculator/webcalculator.aspx
- 28. 28 Hypothetical Case Study: Facts Company A • More than 100 participants • Employees paid every other Friday • Participant deferrals each pay period: $25,000 • Deferrals reasonably can be segregated from general assets within 5 business days following each pay day Delinquent Deposits Pay period ending March 6, 2016 • Company A should have remitted deferral contributions by March 13, 2016 (5 business days) • Date remitted: May 18, 2016 Use the DOL Voluntary Fiduciary Correction Program to correct the late payments Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted.
- 29. 29 Determine corrective contribution amount • Lost earnings on the principal amount • Interest on lost earnings Data for Online Calculator • Principal Amount: $25,000 • Loss Date: March 13, 2016 • Recovery Date: May 18, 2016 • Final Payment Date: November 4, 2017 Repayment amount: $178.76 • Administration costs (service fees for calculation & allocation) Source: Calculations based on VFCP Online Calculator With Instructions, Examples, and Manual Calculations, https://www.askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx Hypothetical Case Study: Correction Delinquent Deposits Note: The persons portrayed in this example are fictional. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed and a financial advisor should be consulted.
- 30. 30 Increased ERISA Penalties ERISA VIOLATIONS PRIOR PENALTY ADJUSTED PENALTY Failure or refusal to file Form 5500 Up to $1,100 per day Up to $2,097 per day Failure to furnish an automatic contribution arrangement notice Up to $1,000 per day Up to $1,659 per day Failure to furnish information requested by DOL (e.g., Summary Plan Description) Up to $110 per day not to exceed $1,100 per request Up to $149 per day not to exceed $1,496 per request Failure to furnish a blackout notice or notice of the right to divest employer securities Up to $100 per day Up to $133 per day Source: 82 Federal Register 11, January 18, 2017
- 31. 31 Fiduciary Breaches DOL Audit “Hot Buttons” Failure to • Prudently select & monitor plan investments • Diversify investments to reduce the risk of large losses • Ensure only necessary & reasonable fees are paid from plan assets
- 32. 32 Fiduciary Education & Fee Disclosure Review Plan Fiduciary Risk Management https://www.dol.gov/sites/default/files/ebsa/a bout-ebsa/our-activities/resource- center/publications/understanding- retirement-plan-fees-and-expenses.pdf https://www.dol.gov/sites/default/files/ebsa/a bout-ebsa/our-activities/resource- center/publications/meeting-your-fiduciary- responsibilities.pdf https://www.dol.gov/sites/default/files/ebsa/a bout-ebsa/our-activities/resource-center/fact- sheets/final-regulation-service-provider- disclosures-under-408b2.pdf
- 33. 33 Qualified Default Investment Alternative (QDIA) Plans with participant investment direction need default investment QDIAs provide fiduciary relief for selecting default investments • Deemed to be a prudent investment • Relieves fiduciary of liability for performance of default investment Permitted QDIAs • Target-date, Custom model target-date, or life-cycle funds • Managed accounts • Balanced funds • Capital preservation product for first 120 days of participation Plan sponsor responsible for prudent selection & monitoring of QDIA Source: 29 CFR 2550.404c-5 Plan Fiduciary Risk Management
- 34. 34 DOL Tip Sheet Increasingly popular 401(k) plan investment option • Often the plan’s default investment • Qualified Default Investment Alternative (QDIA) DOL guidance for comparing & selecting TDFs • Establish process for periodic review • Understand TDF’s underlying investments & the fund’s glide path • Review fees & expenses • Consider custom or non-proprietary options • Provide employee communications • Document the process Target Date Funds (TDFs) https://www.dol.gov/sites/default/files/ebsa/about- ebsa/our-activities/resource-center/fact- sheets/fsTDF.pdf
- 35. 35 Investment Policy Statement (IPS) A written document describing process for selecting & monitoring plan investments IPS often includes • Criteria for selecting investments – Permissible types of investments – Performance criteria – Fees & expenses • Timing of investment reviews • Standards for adding, changing or replacing investments Benefits of an IPS • Provides direction to plan fiduciaries • Demonstrates fiduciary oversight & prudent process Plan Fiduciary Risk Management
- 37. 37 Participants alleged plan fiduciary failure to • Monitor plan fees • Benchmark costs • Follow IPS Excessive Plan Fees LESSON 1 • Collect & analyze fee information • Understand fees being assessed • Follow IPS See Tussey v. ABB, Inc., No. 12-2056, 2014 WL 1044831 (8th Cir. Mar. 19, 2014); Lorenz v. Safeway, Inc., No. 4:16-cv-04903 (N.D. Cal. filed 08/25/16)
- 38. 38 Participants alleged plan fiduciary failure to • Keep fees reasonable • Choose appropriate share class • Follow IPS • Conduct a competitive bidding process Excessive Plan Fees LESSON 2 • Develop written procedures for analyzing fees • Benchmark fees • Monitor fees ongoing See Tibble v. Edison International, C.D. Cal., No. CV 07-5359 SVW-AGRx, August 16, 2017; Kruger v. Novant Health, Inc., 1:14-cv-208 (M.D.N.C. filed 3/12/14); Vellali, et al. v. Yale University, et al., 3:16-cv-01345 (D. Conn. filed 8/9/16); Kelly, et al., v. Johns Hopkins University, No. 1:16-cv-02835 (D. Md., filed 8/11/16); Sweda v. Unvi. of Penn., No. 2:16-cv-04329 (E.D. Pa., filed 8/9/16)
- 40. 40 Consider a Committee Approach to Plan Management Committee Selected Questions to Consider Investment Selection and Monitoring How sophisticated are plan participants in terms of investment knowledge? Do asset classes offered allow participants to diversify appropriately? What are the criteria for selecting and monitoring investment options? Do investment options need to be added, removed and/or replaced? Administration and Reporting What disclosures and notices are required to be distributed and at what frequency? What regulatory forms need to be filed and by what date? Is the plan being administered in compliance with the plan document? Are transactions—including contributions—processed on time and accurately? Service Provider Selection and Monitoring What are the needs of the plan and participants? Do participants make optimal use of the services offered? How—and how much– is the service provider compensated? Do any of the service providers have any potential or actual conflicts of interest? Is the total amount of service provider compensation received reasonable compared to an appropriate benchmark and value of services received? Plan Design and Management What actions should a participant take in an effort to achieve an adequately funded retirement? What plan design features (such as auto-enroll, auto-increase and QDIAs) can help participants achieve an adequately funded retirement? What behavioral finance techniques should be considered to help participants optimize their retirement plan success?
- 41. 41 • Develop written operational policies and procedures • Maintain written records of important activities and decisions • Maintain your plan’s records • Investment Policy • Education Communication Strategy Establish and Document Prudent Practices and Policies
- 42. 42 • Provides a set of voluntary guidelines to transfer the potential liability associated with investment decision making responsibilities to employees who participate in a 401(k) plan • Plan sponsors choosing to comply with ERISA Section 404(c) must meet these key requirements: • Provide participants the opportunity to choose from a “broad range” of investment options • Opportunity • Choice • Diversification • Provide opportunity for participants to “exercise control” over their accounts • Opportunity for participants to transfer among their investment options at least quarterly • Additionally, sponsors must provide sufficient information to help participants make educated decisions about their investment options ERISA Section 404(c) Protection
- 43. 401(k) Plan Check-up Tools
- 44. 44 3. Have you amended your plan document for each plan design change you implemented (e.g., automatic enrollment, designated Roth contributions)? Yes No 1. Do you have a signed copy of the original plan document & each adoption agreement? Yes No 2. Have you signed each IRS-mandated amendment & retained a copy?* Yes No 6. Do you have a copy of the Summary Plan Description (SPD) & amendments to the SPD? Yes No 4. Do you have a copy of the IRS approval letter for your plan (e.g., opinion letter, determination letter)? Yes No 5. Have you kept written minutes or records of each board resolution approving the original plan & each amendment? Yes No Is your plan document up-to-date? Plan Document Checklist: * Your plan document provider or legal adviser is the best resource for a list of required amendments.
- 45. 45 Are the plan’s operations based on the terms of the plan document? Operations Checklist: 1. Is the plan’s definition of compensation for all deferrals & allocations used correctly? Yes No 8. Were hardship distributions made properly? Yes No 2. Were employer matching contributions made to all appropriate employees under the terms of the plan? Yes No 3. Has the plan satisfied the 401(k) nondiscrimination tests (ADP & ACP)? Yes No 4. Were all eligible employees identified & given the opportunity to make an elective deferral election? Yes No 5. Are elective deferrals limited to the amounts under IRC §402(g) for the calendar year? Yes No 6. Have you deposited employee elective deferrals in a timely manner? Yes No 7. Do participant loans conform to the requirements of the plan document & IRC §72(p)? Yes No
- 46. 46 Prevent plan operation errors Help identify errors more quickly Reduce the scope/duration of an examination Importance of Internal Controls SAMPLE INTERNAL CONTROL PROCEDURES Compare deferral election forms with amounts deducted from employees’ wages Verify types of compensation used for allocations, deferrals & testing Check that service providers received accurate compensation records Verify years of service are accurately determined for eligibility & vesting Verify marital status & spousal consent for plan distributions Ensure participants received required minimum distributions Verify validity of rollover contributions accepted
- 47. 47 https://www.irs.gov/government-entities/tax-exempt-and-government- entities-issue-snapshots Sample audit tips for plan operations For example: hardship distributions • Examine forms & any written statements provided by the employee for proper signatures • Make sure distribution is limited to maximum amount related to source of funds • Examine records used to establish whether a hardship exists & amount of hardship • Make sure distribution is properly reported on Form 1099-R IRS Issue Snapshots
- 48. 48 Are you prudently selecting & monitoring plan service providers? Service Provider Checklist: *Applies when reviewing existing service providers 1. Are the services necessary for the administration of the plan? Yes No 7. Do you have any plan participant comments or complaints regarding the services?* Yes No 2. Are the fees reasonable for the services provided? Yes No 3. Have you documented the process you used to select (or review) your service providers & the reasons you selected each particular provider? Yes No 4. Have you compared the service provider’s performance & fee schedule to other providers (e.g., RFP)? Yes No 5. Is the service provider required to be licensed? If so, is the license current? Yes No 6. Has your service provider delivered the services outlined in your service agreement?* Yes No See DOL’s Tips for Selecting and Monitoring Service Providers for Your Employee Benefit Plan https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/fs052505.pdf *Applies when reviewing existing service providers
- 49. 49 Service Provider Checklist ERISA 408(b)(2) Service Provider Disclosure Rules * Applies when reviewing existing service providers. 1 Are the services necessary for the administration of the plan? Yes No 2 Are the fees reasonable for the service provided? Yes No 3 Have you documented the process you used to select (or review) your service providers and the reasons you selected each particular provider? Yes No 4 Have you compared the service provider’s performance and fee schedule to other providers? Benchmarking your plan is a good way to obtain comparative information. Yes No 5 Is the service provider required to be licensed? If so, is the license current? Yes No 6 Has your service provider delivered the services described in your service agreement?* Yes No 7 Do you have any plan participant comments or complaints regarding the services?* Yes No
- 50. 50 Top 10 Fiduciary Mistakes Failure to: 1. Establish written policies and procedures 2. Follow policies and procedures 3. Deal with bad investment options 4. Pay attention to fees 5. Administer correctly, monitor periodically 6. Identify conflicts of interest 7. Differentiate between corporate and plan fiduciary roles 8. Appropriately manage company stock 9. Give employees the help they need 10. Take action
- 51. Support Network
- 52. 52 Support Network FINANCIAL ADVISOR • Helps you understand your fiduciary responsibilities • Regulatory updates • Self-audit tools • Gateway to compliance resources • Investment information • Resource for industry benchmarks • Service provider selection & monitoring support THIRD PARTY ADMINISTRATORS (TPAs) OR BUNDLED SERVICE PROVIDERS • Ongoing compliance & operational support • Proactive monitoring of changes in the law & regulations • Corrections support
- 53. 53 Support Network OTHER SUPPORT SERVICES • Accounting & audit services • Tax & legal services OppenheimerFunds PLAN SPONSOR FIDUCIARY RESOURCES • Plan sponsor fiduciary support & educational programs • Articles, guides & tools
- 54. 54 Plan Sponsor Next Steps Design a compliance strategy • Access your financial advisor’s expertise to develop a plan • Identify your other sources of compliance support – TPA or bundled service provider – OppenheimerFunds Assign internal responsibility Set a timetable • Initial review • Periodic check-ups Document your compliance
- 55. 55 IRS & DOL engage in both compliance guidance & enforcement activities Proactive self-audits are essential to ensure compliance Building a support network is key to ongoing compliance Summary
- 56. 56 ERISA is a highly complex area of law. The information contained in this material is strictly educational in nature and is not intended as legal advice. Clients are strongly encouraged to obtain legal advice from a qualified expert. Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks. including the possible loss of the principal amount invested. This material is provided for general and educational purposes only, is not intended to provide legal or tax advice, and is not for use to avoid penalties that may be imposed under U.S. federal tax laws. OppenheimerFunds is not undertaking to provide impartial investment advice or to provide advice in a fiduciary capacity. Contact your attorney or other advisor regarding your specific legal, investment or tax situation. Before investing in any of the Oppenheimer funds, investors should carefully consider a fund’s investment objectives, risks, charges and expenses. Fund prospectuses and summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting oppenheimerfunds.com or calling 1.800.255.2755. Read prospectuses and summary prospectuses carefully before investing. Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. 225 Liberty Street, New York, NY 10281-1008 © 2017 OppenheimerFunds Distributor, Inc. All rights reserved. RPL0000.039.1217 December 1, 2017 Disclosures