1. Is this program right for our 401(k) Plan?401(k) Compliance - Frequently Asked Questions
  2. What is a Plan Fiduciary?
  3. Who in our Company should answer the questionnaire?   What should we have handy?
  4. What if I don’t have time to finish the questionnaire? Can I save it?
  5. Can the Plan pay for this service?
  6. Do you have a sample report we can see?
  7. I am worried that if I have too many compliance issues I will get fired. What should I do?
  8. What does the Fire System cost?
  9. Do you have different pricing for Small or Large plans?
  10. Is there a way that after I get the report(s), if I need to change an answer or we put out a “hot spot”, can we update our report? We are going to give this to the Board and we want to make sure it is up to date and completely filled out.
  11. We hired “good” service providers and they are helping us. Why do we need this program?
  12. We have a "Co-Fiduciary".  Why would we need the FIRE System?

Responses

  1. Is this program right for our 401(k) Plan?

    The FIRE System was designed for Traditional 401(k) and Safe Harbor 401(k)(12) and 401(k)(13) Plans. Currently the FIRE System is not for a Simple 401(k), SEP IRA or a Solo-k Plans. We are discussing the possibility of adding other plans to the FIRE System.

    This system works best for plans that are over 2 years old. As a Fiduciary for a Plan you need to make sure you and your Plan have in place the proper oversight including policies, procedures and practices for operation and compliance of your 401(k) Plan to mitigate both the Plan Sponsor (employer) and your Personal Liability. The FIRE System aids in reducing Fiduciary risk and helping to keep plans in compliance.

    The FIRE System is right for ANY Plan Sponsor and Fiduciaries of a Traditional 401(k), 401(k)(12), 401(k)(13) Plan who want an easy and cost effective method to find and solve compliance issues. Get started now!

    If your 401(k) Plan Sponsor (employer) has just started a 401(k) Plan within the past 2 years, you may want to look at the results on the FIRE System to make sure you are on track with compliance and have the proper oversight, policies, procedures and practices in place to comply with the complex set of rules and regulations of ERISA that govern plans.

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  1. What is a Plan Fiduciary?

    The Department of Labor is not specific in who they define as a Fiduciary. They don’t define a Fiduciary by title, but instead they determine if a person or entity is a Fiduciary or not by looking at the functions or duties being performed. The DOL states the key to making this determination iswhether they are exercising discretion or control over the plan, acting solely in the interest of plan Participants and their beneficiaries, with the exclusive purpose of providing benefits to them.” 

    For more on who is a Fiduciary and what it means read Who is a Fiduciary?

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  1. Who in our Company should answer the questionnaire?  What should we have handy?

    The questionnaire has been designed so any of the Plan Sponsor's Fiduciaries should be able to answer the questions. The number of questions you receive and the length of time it takes to complete the questionnaire will depend on your answers. We recommend that the person/Fiduciary that completes the questionnaire be involved in many of the day to day/regular functions for your Plan and deals with most, if not all, of the Service Providers.

    That person/Fiduciary should be very familiar with and have the Plan Document/amendments, the Summary Plan Document and the 5500 and should be able to complete most of the questions based on their experience normally within 30 minutes.

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  1. What if I don’t have time to finish the questionnaire? Can I save it?

    Yes. Although the FIRE System program has been designed to be completed using questions in “plain English”, we understand that you may get interrupted and may be prevented from completing it in one session. Because of this, the questionnaire automatically saves your answers as you go through the questions at the end of each page you have completed and saved. Should you be interrupted  you can come back and start at the end of the last page you completed and saved and finish completing the remaining questions when you have the time.

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  1. Can the Plan pay for this service?

    Depending on your Plan Document either the Plan Sponsor (Employer), the Fiduciaries, or possibly the Plan Participants can pay for the service. The Plan Document for your 401(k) should outline the expenses and who is responsible for which expenses. We recommend you contact your ERISA attorney before making this decision.

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  1. Do you have a sample Fiduciary Report we can see?

    We present your information in two different formats.  The first format is presented on your computer screen after you have completed the questionnaires.  For the Risk Assessment, it shows your Risk Meter/Level, and how many Red and Danger Flags your answers show.  Red Flags are the most serious and show your answers appear to be in direct violation of ERISA codes. 

    The Inspection, Solutions and Complete Solutions Packages will show the Enhanced Risk Meter, Enhanced Risk Level, how many Red, Danger and Caution Flags your answers show and question by question the specific issues that correspond to your flags. 

    For the Solutions and Complete Solutions Packages, you will also see question by question solutions to help you correct your issues and prevent further issues.  The second report is a pdf generated report which can be downloaded and printed with all of this information, as well as, additional educational sections to help you bring your Plan into compliance and educate the Plan Fiduciaries and staff. 

    Any changes to your answers will generate an updated report on the screen and for downloading.  Click here to see a sample of what a report contains. Remember your answers will generate the actual content of the report.

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  1. I am worried that if I have too many compliance issues I will get fired. What should I do?

    Because of the complexity of the regulations in the 401(k) Plan area the Government is aware that mistakes or issues will occur. The IRS and DOL advocate you find and correct issues before they find them. 

    The regulators understand that most Plan Sponsors and Plan Fiduciaries are not necessarily experts in the complex areas that relate to 401(k) Plan. But they do expect you to be diligent to locate issues that arise and make the appropriate changes to bring your Plan back into compliance. That is what the FIRE System is designed to do.

    Visit Department of Labor Correction Program

    Visit US Treasury (IRS) Correction Program

    Because of this, they have developed various self-correcting programs to assist when mistakes have occurred. If the Plan Sponsors and Fiduciaries find mistakes and correct them quickly, the fines are generally reduced. However, if the regulators find the mistakes - through an examination, investigation, through their tip line or any other method - the fines are at maximum levels.  Also NOT resolving issues in a timely basis can also lead to criminal or civil lawsuits from regulators or participants for the Plan Sponsor (employer) and Fiduciaries.

    The FIRE System based on your answers was designed to assist you in finding any compliance issues you may need to address and give you potential solutions to mitigate your Plan Sponsor (employer) and Fiduciaries corporate and personal regulatory and litigation risk.

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  1. What does the Fire System cost?

    Traditional consulting to determine if your plan has issues or to obtain detail of specifics can cost plans from several thousands to tens of thousands of dollars.  Our process costs much less than that - on average less than $,1,600 and sometimes much less than this.  If you know your Plan may have issues and want to start finding and correcting them immediately.  We have several pricing options for you.

    If you know your Plan may have issues and want to start finding and correcting them immediately.  We have several pricing options for you need to meet your compliance needs.  Contact us for specific, no obligation quote.

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  1. Do you have different pricing for Small or Large Plans?

    The rules and regulations are almost identical for all traditional 401(k) and Safe Harbor Plans and all Plans must adhere to the ERISA regulations no matter the asset size of your Plan, therefore, the pricing is the same. 

    Currently the FIRE System is not for a Simple 401(k), SEP IRA or a Solo-k Plans. We are discussing the possibility of adding other Plans to the FIRE System.

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  1. Is there a way that after I get the report(s), if I need to change an answer or we put out a “hot spot”, can we update our report? We are going to give this to the Board and we want to make sure it is up to date and completely filled out.

    We understand the need to have up to date information to present to the Board of Directors, the Plan Sponsor (employer) and the Plan Fiduciaries.  We also understand you may not be certain of every answer.  Because of this, The FIRE System allows you up to 60 days from an upgrade to go into your account and update any answers you need to change. This feature is ONLY available for the Inspection, Solutions and Complete Solutions Packages.

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  1. We hired “good” service providers and they are helping us. Why do we need this program?

    The key thing for all Plan Sponsors (employer) and Plan Fiduciaries to remember is that you can delegate tasks but the Plan Sponsor (employer) and all of those who fill a Fiduciary role (see Question #2) cannot delegate your Fiduciary Responsibility. Even if you have a Co-Fiduciary such as a §3(21) or § 3(38) Investment Service Provider or a §3(16) Plan Administrator the Plan Sponsor and Plan Fiduciaries, cannot delegate their Fiduciary and oversight responsibilities.

    We do not take the place nor want to replace your service providers. We want to help you work together with your current providers to bring your Plan into compliance.

    The FIRE System provides the Plan Sponsor (employer) and Plan Fiduciaries an Independent 3rd Party review with a 360 degree overview including possible solutions for your Plan. The FIRE System program is there to help you make sure your policies, procedures, and practices and relationships comply with your Plan Document and ERISA Regulations. It is designed to help locate issues so you can work with specific providers to implement solutions that work for you.

    The FIRE System covers aspects that may involve providers to your Plan such as the Trustee, Investment Service Provider(s), Record Keeper, §3(16) Plan Administrator (External), Third-Party Plan Administrator, CPA, tax accountant, book keeper, payroll provider, ERISA attorney and anyone else who may be receiving compensation from your Plan for a service they are providing.

     Many service providers or consultants claim to do this type of assistance. However, we caution you to keep in mind there may be a “conflict of interest” because the service provider has an interest in the result of any issues they may help you uncover. Also some consultants are looking at ways to have you terminate your relationship with your current provider so that you can hire them to take their place. Again, this is a conflict of interest. The FIRE System is designed to be truly independent. Again, we do not take the place nor want to replace your service providers. We want to help you work together with your current providers to bring your Plan into compliance

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  1. We have a "Co-Fiduciary".  Why would we need the FIRE System?

    Hiring a "Co-Fiduciary" or any Third-Party Fiduciaries such as a § 3(21) or § 3(38) Investment Service Provider or a §3(16) Plan Administrator is a method a Plan Sponsor can utilize to reduce their Fiduciary risk, however, the Plan Sponsor (employer) is still the primary Fiduciary and must oversee the activities and decisions of any service provider hired by the Plan.  

    Some "Co-Fiduciaries" claim they assume 100% of the risk, however, per the Department of Labor, this is not the case.   They may share the risk, however, the Plan Sponsor (employer) in the simple act of hiring the "Co-Fiduciary" is performing a Fiduciary act and the Plan Sponsor (employer) is responsible to make sure the "expert" they hired is performing in the best interest of the Participants. 

    The Plan Sponsor (employer) should mandate the Co-Fiduciary utilize the Fire System as part of the Plan Sponsor's (employer) oversight and review.  We recommend sitting down with the Co-Fiduciaries when they answer the questions so as a Plan Sponsor (employer) you are aware of any issues that may arise.

    Remember the Department of Labor defines a Fiduciary as to “whether they are exercising discretion or control over the plan, acting solely in the interest of plan Participants and their beneficiaries, with the exclusive purpose of providing benefits to them.”

    Regulators do not accept “I did not know….” from Plan Sponsors (employer) or Plan Fiduciaries as an acceptable answer.

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