ST. PAUL, Minn., Nov. 11 /PRNewswire/ -- When an employer offers a 401(k) plan it must manage the plan with the best interests of the employees at heart. But good intentions are not all that is required. The federal Employee Retirement Income Security Act of 1974 (ERISA) also requires that the employer manage the plan with "care, skill, prudence and diligence." It's called the Prudent Person Standard of Care and can be daunting for business owners (plan sponsors) who have no expertise in this area.

Securian Retirement offers information for employers who are trying to get their arms around the scope of their fiduciary responsibilities and manage their 401(k) plan investment options prudently. In a paper available for no charge at SecurianRetirementCenter.com, plan sponsors can learn six of the best practices that they as investment fiduciaries can use to manage their plans.

"Very often employers hire or partner with experts who can help them meet the prudent person requirements," said Kent Peterson, CFA, FSA, AIF©, author of Best Practices for Retirement Plan Investment Fiduciaries, available at SecurianRetirementCenter.com. "But that does not relieve them of their fiduciary responsibility. Implementing some fundamental best practices can help them stay on track."

Securian, which has been in the retirement plan business for nearly 80 years, has identified six best investment fiduciary practices for retirement plan sponsors:

• Maintain an investment policy statement with clear goals and objectives for the plan.
• Meet ERISA section 404(c) requirements when constructing an investment array so employees can create diversified portfolios of varying degrees of risk that meet their investment needs.
• Prudently select and monitor a default investment that qualifies as a Qualified Default Investment Alternative (QDIA). A QDIA provides a plan with relief from the fiduciary liability of investment outcomes for participants using the plan's default investment option.
• Avoid proprietary fund requirements. Some investment firms bundle their investment options, forcing plan sponsors to include options that may not fit the plan's investment policy.
• Demand fee transparency and revenue neutrality. It should be obvious to the plan sponsor what the expenses are and to whom the fees are paid--including any fees paid by the investment company to the plan provider.
• Select an investment array that is appropriate for employees' knowledge and skill levels. This helps prevent employee investment decisions that can be harmful to their ability to meet their retirement objectives.
  

"Managing a retirement plan for the exclusive benefit of the employees is complicated, even for those of us who have the expertise," said Peterson. "Plan sponsors should try to use best practices and align themselves with partners that look out for the best interests of the employer and employees."

Also listed in the paper are 10 core principles Securian follows to assist plan sponsors with implementing fiduciary best practices. These principles, intended to promote the best interest of employers and employees, include objective third-party analysis of investment options and maintaining high educational and ethical standards for the individuals who analyze and select investment options for Securian's plans.

Download Best Practices for Retirement Plan Investment Fiduciaries here.

Securian Financial Group, a business unit of Minnesota Life Insurance Company, helps provide financial security for individuals and businesses in the form of insurance, retirement products and services, and investments. Affiliates include Advantus Capital Management, and Securian Trust Company. Securian, which serves more than 9,000,000 individuals in the US, has nearly $690 billion of life insurance in force, $27 billion in assets under management as of September 30, 2009, and a nationwide work force of 3,500 employees.

SOURCE Securian Financial Group, Inc.

Back to top

RELATED LINKS
http://www.securian.com