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For example: I *HAVE* a client that takes a very paternal approach to all things benefit related. They have less than 20 eployees and I can count on one hand the pre-retirement terminees in the last 10 years. The company has been around for over 40 years and the plan for over 35. They started out, as you would imagine, with balance forward because what else was there, other than big hair, in the early 80's? They engaged a classic investment management firm that publishes quarterly "state of the world" investment philosphy newsletters and issues quarterly statements to the Trustee with everything one would expect of a professional investment management firm. The client is a family run business and the founder's progeny have steered the company as well and as profitably as the prior, now long since retired, generation did. The average account balance for the non-owners is north of 1/4 million. The company distills the information received from the investment advisors quarterly and lets the employees know how things are going (in good times and bad... 2008 is a distant [and bad] memory). The company benchmarks fees no less frequently than every three years and has long since reduced administrative fees to less than 10 basis points (I kid you not). The investment management firm meets frequently with the Trustees. Every once in a while somebody mentions the potential advantages of participant direction but the employees will have none of it. The company certainly doesn't need a participant directed qualified plan to attract talent, it does so quite well without it. The Trustees (who are also the owners of the company) feel that they are addressing their fiduciary responsibilities professionally and responsibly and that they owe their employees every bit of effort they put into comunicating and running the plan. In short, I think that balance forward plans are most successful when there is long term stability - and that doesn't happen very often any more so the market has turned somewhat of a deaf ear to such client's needs. Did I mention this is a 401(k)? And that it would pass the ADP test each year with plenty of room to spare (even though the design is, as you would guess, a safe-harbor). I think the real losers in participant directed plans are the participants. And I think this has come about because the true professionals in the investment management world have found it more profitable to attract non-ERISA monies and have abandoned ERISA plans for the most part. But I, too, am surprised at the statistics because I would expect plans that do not offer participant direction to be, at most, in the single digits.

FWIW, I agree 100% with MoJo. When errors happen we fix them and change the process to make sure they don't happen again. We don't continue with the same flawed process because it is cost effective. I would go as far as saying that a fiduciary who contracts with a service provider knowing that the process will produce errors and that the process will not be revised to prevent those errors in order to cut down cost is in breach before the error even happens. An agreement with that flawed service provider is certainly not in the best interest of the participants, and the fiduciary's responsibility is to find a a service provider who will perform accurate work (and fix flawed processes) at a reasonable and necessary cost.

Sorry I disagree. "Close enough" is a per se breach of a fiduciary duty. Errors happen, but "acceptance" of a process that will tolerate x% errors is simply not acceptable. The "process" itself should be designed to not produce errors, and when errors occur, the failure in the process needs to be addressed. Anything less is philosophically not consistent with the concept of a "fiduciary." I would suggest an increase in fees to better ensure error free processing would be the "prudent" thing to do. Think about VCP or SCP filings - a pre-requisite to relief is ALWAYS to identify how the gaps have been plugged to best ensure it won't happen again. Saying, we've fixed it so no more than 5% will be in error in the future won't cut it - and that isn't even dealing with the higher standard of being a fiduciary!

Nope. As long as they timely deposit them when actually withheld, the are deposited timely.

Yea but without badly written regs we would lose out on so much fun... So maybe the unedited comment wasn't so far off after all

I have exercised moderator discretion to remove the link, rather than remove the entire post or thread. The original poster may benefit by contributing to the message boards in the future, as long as posts stay away from self-serving intents. The user community is always open to sharing, and hopes the poster is willing to participate.