The Problem

The 401(k) business model is broken and we are working with Plan Sponsors and their Plan’s Financial Advisor(s) to fix it.

Plan Sponsor’s Time & Money is Wasted

The business owner (or “Plan Sponsor”) currently spends too much of their own time and money managing their employee benefits.  In addition to the money being paid to Plan Vendors “inside” your 401(k) plan, Plan Sponsors also pay the salaries of their own employees to internally manage the day-to-day operations of their 401(k) plan.

But according to Fred Reish and Bruce Ashton, “Even the most diligent employers are often ill-equipped to deal with the regulatory complexities of qualified retirement plans because they lack the internal resources to execute their fiduciary responsibilities.”1

Because business owners typically wear multiple hats and may be unsure about all of their obligations and responsibilities under ERISA as the Plan Fiduciary, it’s increasingly important that business owners do what they can to mitigate the fiduciary risk created by their 401(k) plan no matter how big or small the plan is.


Remarkably, an alarming 44% of Plan Sponsors are NOT aware that they are plan fiduciaries. 2  If almost half of the Plan Sponsors (i.e. Employers) aren't aware of their legal responsibilities under ERISA, how can they expect to be properly managing their plan?

Plan Sponsor’s Take on Significant Risk

As a Plan Fiduciary, the business owner must recognize that their actions (or inaction) can expose their personal net worth to restore any losses incurred to the plan.  The Department of Labor (DOL) may enforce liens on a fiduciary’s personal property, garnishments of the fiduciary’s future income and/or enforce offsets of a fiduciary’s own 401(k) account3 to restore plan assets.

ERISA § 409:  “Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations or duties imposed upon fiduciaries by this title shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary…

Through no direct-fault of the Plan Sponsors (i.e. the Business Owners), the vast majority of retirement plans are not in compliance with the DOL or IRS rules and regulations as can be seen in the numbers below.


The Department of Labor, Employee Benefits Security Administration (EBSA) reported that in FY 2016, an incredibly high 67.7% of the retirement plans investigated resulted in monetary penalties or other corrective actions.  The EBSA restored over $777.5 million to employee benefit plans with the average recovery at $573,000 per closed investigation in 2016.4


The Department of Labor found in their 2014 review of the 7,300 licensed CPAs who audited more than 81,000 retirement plans, that a whopping 39% of the plan audits done contained major deficiencies – which put $653 billion and 22.5 million plan participants and their beneficiaries at risk.5


The Department of Labor hired more than 1,000 new employees in 2013 to help bolster their auditing efforts with respect to ERISA compliance.

The EBSA’s responsibility is to ensure the integrity of private employee benefit plans.  While this cause is well-intentioned, it will come at a cost not only to taxpayers, but to the private business community itself.  Clearly, the DOL, through the EBSA, is looking to generate revenue to the agency itself through fines and penalties with compliance audits, fiduciary corrections, and complaint resolutions as their means – a sort of self-funding mechanism without necessarily having to increase taxes.

The consequence of the DOL’s EBSA achieving these impressive investigation results means more government intervention at the expense of an employer’s time, energy, and money.  With their recent hiring practices, it is safe to say the DOL wants even more in the future.

Are YOU ready for a DOL investigation of your retirement plan?



As your BFF® we can handle almost all aspects of the day-to-day administration of your 401(k) plan, including the vital fiduciary administrative functions.

Yes, you really can rely on your BFF® to do it all for you… with the single exception of submitting your payroll.

By hiring BFF®, Plan Sponsors gain our valuable expertise and significantly reduce their liability, while also being able to redirect their employees’ time into more productive and profitable activities.

Click here to learn more about how BFF® can help you administer your 401(k) plan.

1  Fred Reish and Bruce Ashton are partners with Drinker, Biddle & Reath, LLP and are recognized as two of the leading ERISA attorneys in the U.S.

2 Aligning Goals, Improving Outcomes: 2015 Defined Contribution Survey Findings, J.P. Morgan Asset Management

3  The Taxpayer Relief Act of 1997 adds IRC §401(a)(13)(C) and ERISA §206(d)(4) to permit the offset of a participant's benefits under a plan for an amount the participant is required to pay because of: (1) a judgment resulting from conviction for a crime involving such plan, (2) a civil judgment involving ERISA fiduciary rules, or (3) a settlement agreement with the DOL.

4  2016 Fact Sheet, EBSA Restores Over $ 777.5 Million to Employee Benefit Plans, Participants and Beneficiaries.

5  EBSA Publishes Plan Audit Quality Report, Audit Deficiencies Putting Plans and Participants at Risk