Today I saw a republished article entitled “Warning: DOL found three-fourths of 401(k)s illegal.”  The article states that in 2013, “75% of the plans examined were fined, penalized or forced to make reimbursements for plan errors” with the average fine being $600,000 per Plan. That means 25% of 401(k) plans were okay.

That made me stop and think…see at heart I am an analyst, a numbers person, an investment person …the initials after my name, CFA, mean Chartered Financial Analyst which is the toughest, most prestigious investment designation to get in the world.  (i know...but I decided to brag a little)

I had read another statistic recently from a 2009-2010 Unified Trust study that showed that 95% of Plan Sponsors are, at minimum, “somewhat comfortable” that they have taken every “reasonable precaution” to insulate themselves against legal challenges stemming from a breach of fiduciary.   That means that only 5% would have fiduciary problems.

But wait, the DOL numbers show the reality that JUST 25% of 401k Plans were okay, not the 95% Plan Sponsors THOUGHT.   

The true reality is Plan Sponsors need to be realistic about their responsibilities as a fiduciary.  As a fiduciary, you are NOT ALLOWED to be good enough or “somewhat comfortable,” you must do what is best.  When it comes to the participants, the IRS and the DOL that means having independent third-parties review their plans.  It is simple, Take The FIRE System's free Risk Assessment and find out right now if you are part of the 75% with issues or the 25% who are okay.  Why think...be sure.

Do you really want to risk having an average fine of $600,000?  Get an independent review and save lots of money, time and stress.  Well I guess 25% doesn’t equal 95%.