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P R E C I S I O NExpert Guidance and Creative Solutions for Retirement Professionals VOL 3 2015
A DWC ERISA CONSULTANTS PUBLICATION
Things You Might Not Know
About Your Retirement Plan

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A DWC ERISA CONSULTANTS PUBLICATION 2015
FROM THE EDITORS TABLE OF CONTENTS
“There’s no such thing as a stupid question.” It’s a saying we’ve all
heard and probably uttered countless times in our lives. It’s been
attributed to everyone from Socrates to Carl Sagan. Although
none of them worked with employee benefits, it couldn’t be more
applicable to the world of retirement plans.
The Pension Protection Act was over 1,000 pages; the updated
401(k) regulations published a couple years before were more
than 200 pages. And those are just two of the countless laws and
regulations that govern retirement plans.
Add to that the fact that many of those rules are…how shall we
say it…counter-intuitive, at best. That means attempting to figure
out the answer by applying common sense doesn’t always lead to
the correct result.
Did you know that year-end payouts to partners in a partnership
are treated differently than year-end payouts to owners of a
subchapter S corporation? How about that 401(k) loans to
participants start out as illegal transactions that must meet
special exceptions in order to be acceptable? Here’s another one
… does it make sense that a participant’s will has no bearing on
where the retirement plan benefits go at death?
This year’s edition of PRECISION magazine highlights some of
the more common things you might not have known about your
retirement plan. Not that you should have known them, because
many barely make sense in theory, let alone in the context of day-
to-day reality.
This is good news for a couple of reasons. First, it reinforces
that there really is no such thing as a stupid question. Second,
we get it. We might not have the answer to life, the universe and
everything, but we’ve got you covered when it comes to your
retirement plan.
Keith Clark, Doug Hoefer and Adam Pozek
Partners, DWC ERISA Consultants, LLC
2.
Twenty Questions –
Retirement Plan Loan Style
Kelly Marie Hurd, ERPA, CPC
6.
Compensation Jeopardy
Joni L. Jennings, ERPA, CPC, QKA, QPA
10.
The $64,000 Question – How Does
My Investment Professional Get Paid?
Doug Hoefer
14.
Weakest Link … What’s Yours?
Richard N. Carpenter
17.
Family Feuding About Benefits
Adam C. Pozek, ERPA, QPA, QPFC
20.
No Need to “Press Your Luck” When
It Comes To Government Audits
Karla Bomgardner, ERPA, QPA
24.
Marketing’s Fiduciary Responsibility
Rick Alpern

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A DWC ERISA CONSULTANTS PUBLICATION 2015 2.
Twenty Questions – Retirement Plan Loan Style
By Kelly Marie Hurd, ERPA, CPC
So, your plan allows loans. Simple enough, right?
Participants borrow money from their accounts
and pay it back. What can possibly make that
complicated? Funny you should ask - retirement plan
loans are actually your ultimate frenemy. They have
advantages, but there is that dark side you need to
keep your eye on.
Don’t believe us? Let’s play a game of twenty questions!
What is a participant loan from a retirement
plan?
Fundamentally, it is an exception to a rule. The
regulations prohibit retirement plans from loaning
money to interested parties, including participants.
That prohibition, which actually pre-dates the ability
of participants to direct the investment of their own
accounts, is designed to prevent plan officials from
using plan assets for less than honorable purposes.
Participant loans are an exception to that broad
prohibition. As long as certain limitations and
parameters are satisfied – amount, duration, interest
rate, etc. – an otherwise impermissible loan becomes
okay.
Do I have any options that can limit the number
of loans in the plan?
The IRS has some limitations, but you are able to
further restrict availability within your specific plan.
Here are the parameters the IRS has set.
•• Length: Maximum of five (5) years. May be
extended if for the purchase of a primary residence.
•• Amount: Maximum of 50% of the participant’s
vested account balance, subject to an overall cap
of $50,000.
•• Number: No regulatory limit, though many plans
limit a participant to only a single loan at a time.
•• Interest rate: Must be commercially reasonable,
similar to the rate a bank would charge for a fully
secured loan. Many plans base it on the Prime
Rate, e.g. Prime + 1%.
•• Payment frequency: At least quarterly, though most
plans require payments through payroll deduction.
Plans that offer loans must document these
provisions either as part of the regular plan
document or in a separate written loan policy.
As always, feel free to reach out to your team at
DWC to discuss your options.

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A DWC ERISA CONSULTANTS PUBLICATION 20153.
If actual payments do not follow that schedule
every step of the way, it can create compliance
headaches for the plan and trigger tax liabilities for
the participant.
The maximum length of time a loan can be taken
is five (5) years; however, if the participant uses
the loan proceeds to purchase his or her primary
residence, the plan can be written to allow the loan
to be amortized over a longer period of time.
How do we handle a missed payment?
A payment could be missed for any number of
reasons – anything from an hourly employee
not having a paycheck from which to withhold
a scheduled payment to simple administrative
oversight. Regardless of the reason, a missed
payment means the loan is in default and steps
must be taken to get it back on track as quickly as
possible. Options vary but could include doubling up
on withholding (plus accrued interest) on the next
paycheck to potentially refinancing the loan if the
plan allows it. If missed payments are not caught up
by the end of the following quarter, the outstanding
balance must be treated as a distribution to the
participant, resulting in taxes and penalties.
Can I deny a loan request?
It depends. We know that’s a cop-out answer, but
it’s true. Certainly, if the request is outside the plan’s
loan rules, it should be denied. Also, if you have
actual knowledge that a participant is using the
loan option as a way to access his or her account
and has no intention of repaying the loan, that
could be grounds for a denial. Beyond that, it is
difficult to think of a circumstance when it would
be appropriate to deny a legitimate request. It
is important to note that loans must be offered
on a nondiscriminatory basis. In other words, it
would be a violation to deny a loan to a non-highly
compensated employee but approve a request
by an HCE under similar circumstances. As with
pretty much all plan-related decisions, keeping
documentation as to why a loan is denied is a must.
How and when should the loan be paid back
into the plan?
Although the rules offer some flexibility, most plans
require participants to repay their loans through
payroll deduction. That means when a participant
takes a loan, it is amortized assuming a payment
will be automatically withheld from each paycheck.
Twenty Questions – Retirement Plan Loan Style ... continued
If an active employee wants to discontinue their payments, can I say yes?
The short answer is “No.” The longer answer is that one of the underlying requirements for a loan to
be permitted is that it must be an enforceable agreement, and plan fiduciaries have a legal obligation
to enforce a plan’s agreements and collect amounts that are owed to the plan. That means once a
participant has agreed to repay the entire loan, it becomes a plan fiduciary’s duty to make sure that
happens. To voluntarily discontinue payments on a participant’s request would be a violation of that
duty. However, if a participant will be out of work on an approved formal leave of absence, payments
can be temporarily suspended. There are a lot of details on how that works. So give us a call if you are
facing that situation and we can help you understand the options.

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A DWC ERISA CONSULTANTS PUBLICATION 2015 4.
What happens when a participant with an
outstanding loan terminates employment?
Most plans include a provision that makes
outstanding loans due immediately on termination
of employment. Since the participant in question
no longer has a paycheck from which to withhold
payments, the pay-off is made via personal check
or money order. If it is not repaid, it is treated as
a taxable distribution to the participant. Early
withdrawal penalties may also apply.
You’ve made a couple of comments about
loans being treated as distributions. How does
that work?
The so-called “deemed distributions” rules are kind
of like falling out of a window. No one has to take
any action to make gravity work … it just does. Same
with a loan that is behind and not caught up by the
end of the next quarter…it is automatically deemed
to be a taxable distribution whether anyone reports
it as one or not. Obviously, the plan has a duty to
document it, but failure to do so doesn’t mean the
tax liability isn’t there.
The participant must be issued a Form 1099-R,
reporting the outstanding balance as a taxable
distribution. The deadline for the 1099 is the
January 31st immediately following the year of the
deemed distribution. Although plan recordkeepers
can usually provide this service quite easily, they
typically require a plan sponsor to request it for each
applicable loan. In other words, recordkeepers often
do not issue 1099s for deemed distributed loans
automatically.
Although this should primarily involve terminated
employees, it is possible that an active employee
could end up with a deemed distribution as well.
However, since payments should not be voluntarily
discontinued for an active employee, please call us
if this situation arises so we can make sure there
are not any other compliance issues that need to be
addressed.
What happens when an employee wants to pay
off their loan early? Can they?
It’s possible, if the plan allows for pre-payment of the
loan. However, the pay-off should be recalculated to
adjust for the interest due through the shorter time
period. Just let us know if you have any participant
inquiries and we can help evaluate their options.
Argh! Should I even allow loans in the plan?
While loans may seem like they are more trouble
than they’re worth, think about the alternative. An
employee may instead take a distribution, which will
never be repaid. The money is gone. With a loan,
the funds are eventually returned to the plan and
available to the participant as a retirement benefit,
which is the primary purpose for the plan.
What do I do if/when I have more questions
about loans?
Ok, that only makes 11 questions, but this is the
easiest one to answer. Call DWC!
Kelly has worked in the retirement consulting industry for over a decade. She is a Senior Retirement Plan Consultant and Team
Leader at DWC ERISA Consultants. Kelly is active in ASPPA and serves as Vice-Chairperson of the ASPPA Government
Affairs Committee IRS Subcommittee and is on the Board of Directors of the ASPPA Benefits Council of the Carolinas.
Additional reading
Retirement Topics – Plan Loans
http://www.irs.gov/Retirement-Plans/Plan-
Participant,-Employee/Retirement-Topics-Loans

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Silvercar – www.silvercar.com
Imagine renting a car on your next trip without having to wait in line at the counter,
explain to the clerk for the 23rd time why you don’t want their over-priced insurance
or scramble to find a gas station near the airport on your return. With Silvercar, that has become
a reality. Here’s how it works:
•• Book your reservation using their clean, simple web interface or smartphone app.
•• Tap the button in the mobile app once you have your bags and they will send the shuttle for
you.
Now for the really cool part…
•• Once you get to the lot, simply use your smartphone’s camera to scan the QR code on the
windshield of the car of your choice and Silvercar sends a remote signal to unlock it.
•• Get in the car and drive off into the sunset.
When you return the car to the lot, again scanning the QR code on the windshield, Silvercar
automatically uses GasBuddy.com to find the cheapest gas in the area, multiplies that price by the
gas you actually used (based on the car’s tank sensor) and applies the total to your bill.
Did we mention that all of their cars are silver Audi S4s with navigation, satellite radio, heated
seats …you know, the works … and all at a daily rate that is less than a full size at those other
rental car places. You can thank us later.
CHEAPTECHTOOL#57
Participants must be provided a notice at least 30 days prior to changing out
a fund in the plan’s investment lineup.
FACT | The Department of Labor’s participant fee disclosure regulations require plan sponsors to
provide an annual notice to all participants (including those who choose not to contribute as well
as former employees with remaining balances), providing information about the plan’s investment
options. If any of the information contained in the annual notice changes, the participants must be
notified of the change 30 to 90 days before the change becomes effective. There is an exception to
the 30-day requirement in cases of unforeseeable events or circumstances beyond the plan sponsor’s
control, but those are expected to be few and far between.

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A DWC ERISA CONSULTANTS PUBLICATION 2015 6.
Compensation Jeopardy
By Joni L. Jennings, ERPA, CPC, QKA, QPA
Employees work; they get paid. Easy peasy. Not
so fast. According to the IRS, using incorrect
compensation amounts to calculate retirement plan
benefits and conduct annual compliance testing is
one of the most common errors they see. How can
such a straight-forward topic be that confusing?
Find out in this episode of Compensation Jeopardy!
Be sure to phrase your responses in the form of a
question!
Our first category is
COMPENSATION PAID TO BUSINESS OWNERS
And the answer is:
Sole proprietors, partners and certain LLC
members have THIS in common.
Response:
What is earned income?
*ding, ding, ding*
You are correct!
If you are self-employed, special rules apply when
calculating your retirement plan compensation.
There are several variables and tricky calculations
that are enough to make anyone’s head spin. The
calculation is further complicated if you have other
employees. For example, if you are a sole proprietor
with employees covered by your retirement plan,
you must deduct any matching and profit sharing
contributions you make for them as a business
expense, which reduces your earned income. If you
have an equal partner, then each of you must reduce
your earned income by half of the total company
contributions for employees. The more owners/
partners involved, the trickier the calculation
becomes.
Earned income is further reduced by half of the self-
employment taxes you owe for the year. This involves
another set of equations to derive the amount of the
deduction.
The next step is to calculate your company
contribution, which is based on your compensation
as described above but is also a business expense
which further reduces the compensation used to
calculate your contribution.
*audience laughter*
Yes, a circular calculation indeed. And just because
your total earned income is well above the annual
compensation limit ($265,000 for 2015) doesn’t
mean you can skip all the fun. It is still important to
go through the process to ensure that the reductions

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A DWC ERISA CONSULTANTS PUBLICATION 20157.
described do not reduce your net earned income
below the limit.
If your head isn’t spinning, you are doing better
than most! The good news is that DWC can work
with you and your accountant to ensure all of the
necessary factors are considered and take care of
these calculations for you.
*applause*
Our second category is
AMOUNTS PAID AFTER
AN EMPLOYEE TERMINATES
And the answer is:
This type of compensation is NEVER counted
as eligible plan compensation.
Response:
What is severance pay?
Right you are!
*audience applause*
But contestant beware, “severance pay” is not
the same as “post-severance pay.” Confused? We
would be impressed if you weren’t! Post severance
compensation includes any amount that is paid
to an employee after he or she has terminated
employment and includes items such as:
•• Payment for unused vacation or sick leave;
•• Payment of earned but not yet paid bonuses or
commissions;
•• Distributions from certain non-qualified deferred
compensation plans; and
•• Traditional severance when someone is essentially
paid to leave.
The first three (3) are amounts the employee would
have been entitled to receive even if s/he remained
employed, and the default is to include them in plan
compensation if paid to the employee by the later of:
•• 2 ½ months following the employee’s date of
termination, or
•• The end of the plan year in which the employee
terminates.
However, the plan documents can be amended to
modify this definition.
And the Double Jeopardy answer is:
This type of payment to a business
owner is not considered earned income
for retirement plan purposes.
Response:
What is a subchapter S corporation
dividend?
Correct again!
Although reported on a Schedule K-1 that
is very similar to partnership income, S
corporation profits that are passed through
to the owners at the end of the year are not
counted as compensation when it comes to
the retirement plan. So, if an S corp owner
receives $100,000 in W-2 compensation and
$150,000 in distributed profits, the plan
only considers $100,000 and not the full
$250,000. For that reason (among others),
it is important for S corp owners to review
their own compensation strategy to make
sure they don’t inadvertently reduce or
increase their own contribution.
Compensation Jeopardy … continued

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A DWC ERISA CONSULTANTS PUBLICATION 2015 8.
The last – traditional severance - is only paid if an
employee leaves. It can never be counted as plan
compensation, so it is important not to promise a
departing employee that they can make deferrals or
receive company contributions on those amounts.
Our third category is
NON-RECURRING OR IRREGULAR
COMPENSATION
And the answer is:
These types of non-recurring compensation are
always counted as plan compensation unless
specifically excluded by definition in your plan
document.
Response:
What are bonuses, overtime and commissions?
You are on a roll – CORRECT!
The most common definitions of compensation in
plan documents are tied to amounts reported on
Form W-2 or amounts used to determine income tax
withholding. Although there can be some nuances
that separate these two definitions, both include
bonuses, commissions and overtime. In most
instances, these amounts should be treated just like
any other payroll with employee deferral elections
applied. If included with regular paychecks, it doesn’t
create much, if any, additional effort; however, if
paid in a separate check outside of payroll, it can be
easy to overlook them. In addition to withholding
401(k) deferrals, these forms of compensation
must also be considered when calculating matching
and profit sharing contributions and performing
compliance testing.
There are some exceptions, but they must be spelled
out in the plan document. In other words, the
plan must be written in a manner that specifically
excludes these compensation “extras” if that is your
intent.
Contestant beware! The exclusion of these
types of irregular compensation requires special
nondiscrimination testing each year. If you exclude a
greater percentage of compensation from your lower
paid employees than your higher paid employees,
you may not be able to exclude that compensation
after all, AND you may have to make some
additional corrective contributions to the plan.
Our final category is
ALLOWANCES AND NON-CASH
COMPENSATION
The final jeopardy answer is:
Personal use of a company car, relocation
allowances and gift cards are examples of this
type of compensation.
Response:
What is a taxable fringe benefit?
That is correct! We have a winner!
Fringe benefits come in two varieties, taxable and
non-taxable. The taxable ones are part of plan
compensation, while the non-taxable ones are not. The
difference usually depends on whether the employee
must provide substantiation of expenses in order to
receive the payment. For example, if a company agrees
to reimburse an employee for costs associated with
relocation for the job and the employee must provide
receipts to document actual expenses, the payment
is considered a reimbursement, is not taxable, and is
not reported on Form W-2. However, if the company
simply pays the employee, say $5,000, to cover moving
expenses regardless of the costs actually incurred, it is
treated as a taxable allowance and is reported on the
W-2. It is similar with automobile related expenses …

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With over 20 years in the pension consulting trenches, Joni brings a wealth of experience to her role as Principal and Team
Leader at DWC ERISA Consultants. As a long-time volunteer for ASPPA (the American Society of Pension Professionals and
Actuaries), she has served on the Government Affairs Committee and Conferences Committee, and she currently sits on the
Board of Directors of the ASPPA Benefits Council of Atlanta.
a direct mileage reimbursement is non-taxable, while a
monthly auto allowance is a taxable fringe benefit.
What if the benefit does not involve cash? Items like
gift cards or allowing an employee to use a company-
owned car for personal use have monetary value and
are subject to income tax (and therefore count as plan
compensation) even though there was no actual cash
involved. If there was no payment, how can deferrals
be made? This can be tricky and depends on how
your plan document is written. If you pay non-cash
compensation, the plan can be designed to exclude
these amounts completely or just with regard to
employee deferral elections. The good news is that if
the plan is written to exclude all taxable fringe benefits,
no additional testing is required each year.
If you aren’t sure what your plan requires or you pay
different types of non-traditional compensation, give us
a call. We once had a client who paid “fish tank pay.”
No matter what you call it, we can help you know and
understand your plan’s definition of compensation so
that you keep the plan out of jeopardy.
IFTTT – www.IFTTT.com
Four words - If This Then That – get it? No really, you should get it. Their tagline is “put
the internet to work for you.” We call it automating your life. Using their website or
mobile app (both of which will cost you a big fat nothing), create “recipes” that turn online
accounts and web-enabled gizmos you already use into your own personal eMinions.
Use a Fitbit to track your sleep? A little grumpy if you don’t catch enough Zs? Set IFTTT to check
your Fitbit and post a warning to all your friends on Facebook to steer clear (or bring you coffee)
any time you burn the midnight oil. If Weather.com reports a high UV index for the day, have
IFTTT send you a reminder to apply sunscreen or pack a hat. Need a more businessy example?
Ok, how about automatically sending a LinkedIn request every time you add a new contact to your
smartphone’s address book?
There are hundreds of pre-programmed templates just waiting for you. The hardest part of using
the app is trying to remember how many Ts there are in IFTTT. Fair warning – it is addictive as you
imagine the possibilities. I wonder if Al Gore imagined this possibility when he invented the internet.
CHEAPTECHTOOL#63
Additional Reading
IRS Publication 15 – Circular E, Employer’s Tax
Guide
http://www.irs.gov/pub/irs-pdf/p15.pdf
IRS Publication 15-A – Employer’s Supplemental
Tax Guide
http://www.irs.gov/pub/irs-pdf/p15a.pdf
IRS Publication 15-A – Employer’s Tax Guide to
Fringe Benefits
http://www.irs.gov/pub/irs-pdf/p15b.pdf
Compensation Jeopardy … continued

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A DWC ERISA CONSULTANTS PUBLICATION 2015 10.
Plan sponsors have many plan-related decisions
to make. As fiduciaries, sponsors must make all
of those decisions in the best interest of plan
participants and with the exclusive purpose of
providing benefits to them. Hiring an investment
professional (or any other service provider) is one of
those fiduciary functions, and understanding how
he or she is paid is a critical component in making a
prudent selection.
Before diving into the deep end, let’s quickly review
two terms – broker and investment adviser. Although
sometimes used interchangeably, there are some
important differences.
The $64,000 Question –
How Does My Investment Professional Get Paid?
By Doug Hoefer
Brokers
•• Paid commissions tied to the investment
products they sell to their clients.
•• Permitted to provide education but not advice.
•• Regulated by the Securities & Exchange
Commission (“SEC”) under the Securities
Exchange Act of 1934, as well as other self-
regulatory agencies, including the Financial
Industry Regulatory Authority (“FINRA”).
•• Must hold a Series 63 registration.
Advisers
•• Paid a fee for their services.
•• Permitted to provide specific advice or
recommendations, which must be in their
clients’ best interests.
•• Must be registered as Investment Advisers under
the Investment Advisers Act of 1940.
•• Must hold the FINRA Series 65 or 66
registration, and their firms must be registered
either with the SEC or with their states’
Securities Commissioners.
With that background out of the way, let’s turn our
attention to how brokers and advisers actually get
paid. There are three primary compensation models,
each with its own set of pros and cons. They include
commissions, asset-based fees and flat/hourly fees.
Regardless of the model used, it is important to
remember that there is no requirement to select the
least expensive model. Instead, the law requires that
compensation paid must be “reasonable” in light of
the services received. Both the Department of Labor
and the courts have noted that considering only cost
while ignoring factors such as expertise and level of
service can be just as problematic as paying too much.
Commission-Based Model
When a plan sponsor hires a broker, that broker is
paid a commission on the products he or she sells
to the plan. These could include individual securities
such as stocks or bonds as well as mutual funds or
insurance products.
There are numerous commission options available;
however, as it relates to mutual funds, there are
three types of commissions paid to brokers: up-
front commissions, back-end commissions and trail
commissions. Mutual fund providers offer different
share classes which dictate how commissions are
paid. We will focus on the two most common share
classes – A shares and B shares. It is important to
note that different mutual fund families offer other
share classes with variable commission structures,
so it is necessary to review prospectuses and other
documentation to understand how the broker’s
compensation is determined prior to selecting an
investment to offer participants.

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A Shares & Up-front Commissions
Mutual fund A shares pay an up-front commission,
commonly referred to as a sales charge or load.
The commission is paid to the broker in the first
year amounts are invested in the mutual fund. The
amount of the commission can vary by mutual fund
provider and generally ranges from 1.00% to 5.75%,
and A shares have lower ongoing expense ratios than
B shares (more on that later).
Consider this example. Vanna invests $10,000 in a
mutual fund A share with a 5.75% load; Bob Broker
is paid a commission of $575 and the remaining
$9,425 is invested in the fund.
A shares do offer breakpoints, which are discounts
off the load rate. The more you invest, the lower
the sales charge. For example, if the investment is
$1,000,000, the front-end load is 0.00% to the plan
participant; however, the mutual fund family may
still pay a 1.00% finder’s fee to the broker.
B Shares & Back-end Loads
B shares have a deferred sales charge, commonly
referred to as a back-end load, and pay the broker
an up-front commission even though 100% of the
investment goes into the mutual fund. However, they
carry a back-end sales charge that decreases over the
length of time the investment is held.
Example: Chuck invests $10,000 in a mutual fund
B share with a 6-year, decreasing back-end load.
Although Bob is paid a commission, all $10,000 of
Chuck’s money gets invested. When Chuck sells only
a year later, he pays a deferred sales charge of 4.75%,
meaning he receives only $9,525. If he holds the B
shares for at least 6 years before selling, the back-
end load drops to 0.00%, so he receives 100% of the
account value.
B shares usually have a higher on-going expense
ratio than A shares and are, therefore, often more
expensive for long-term investors.
Trail Commissions
Both A and B shares also pay a trail commission.
Often referred to as 12b-1 fees, these are annual
marketing or distribution fees paid to the broker.
They are considered an operational expense of the
mutual fund and, therefore, create a dollar-for-dollar
reduction in the investment returns. For example,
if a fund generates a gain of 3.75% and has a trail
commission of 0.25%, the rate of return realized by
the investor is 3.50%.
The fee generally ranges from 0.25% in A shares to
1.00% in B shares, thus the comments above about
A shares having lower ongoing expenses. There are
some products that allow the broker to, in essence,
The $64,000 Question – How Does My Investment Professional Get Paid? ... continued

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A DWC ERISA CONSULTANTS PUBLICATION 2015 12.
choose their own commission rate by providing
multiple share classes with different levels of trail
commissions. That means two brokers selling
essentially the same product may have widely varying
compensation, which directly impacts the cost
charged to participants.
In today’s marketplace, 401(k) plans typically have
access to load-waived mutual funds. That means
there is neither a front-end nor back-end load, and
the trail commissions are the only ones paid.
One of the advantages that is often cited for the
commission model is that it provides compensation
to investment professionals to work with startup
or small plans with asset levels that are too small
to charge a reasonable fee. Similarly, commissions
create a framework for employers to offer a plan
even though they might not have the budget to pay
the related fees out of pocket.
Conversely, since the commissions are built into
the overall expenses of the funds, they can be more
difficult for both plan sponsors and participants to
identify. As a result, it is important for employers
to work with their brokers and review fund
documentation to understand the fees that are being
paid to ensure they are reasonable.
Asset-Based Model
Plan sponsors that hire an investment adviser pay an
asset-based fee equal to a percentage of the assets in
the plan.
Example: Let’s Make A Deal, Inc. has a 401(k) plan
with $1,000,000 in assets. They hire Alex Adviser
who charges a fee of 0.50% (also expressed as 50
basis points). Alex’s annual fee is $5,000.
Generally, these fees are paid directly from the plan
assets on a quarterly basis, i.e. 0.125% or $1,250
each quarter. In this model, no compensation is
paid based on any plan transactions, i.e. buying and
selling of mutual funds, and any 12b-1 fees built into
the funds can be applied to offset the adviser’s fee.
Many advisers tier their fee schedules based on
the size and growth of the plan assets. An adviser
may charge 0.50% for a plan with $1,000,000 in
assets while charging only 0.40% for a plan with
$2,000,000. Tiered schedules usually continue
to decrease to a minimum asset charge and may
transition to a flat fee at a certain plan asset size
such as $10,000,000 or more.
Flat/Hourly Fee Model
A somewhat recent trend among retirement plan
An investment professional who gets paid on commission is not allowed to give advice to a
retirement plan sponsor or participant. They can educate – buy low, sell high, diversify –
but they cannot recommend specific investments. Although most investment professionals
look out for their clients, the intent of this rule is to remove any incentive for a broker to
recommend an investment simply because it pays a higher commission.

14.
A DWC ERISA CONSULTANTS PUBLICATION 201513.
advisers has been to charge a flat fee or an hourly
rate for the services they provide. This may be in lieu
of or in addition to an asset-based fee, depending
on the actual services. For example, an adviser might
charge a flat fee to select the investment menu and
a lower asset-based fee or an hourly rate to meet
one-on-one with individual plan participants. For
larger plans, there might be an all-inclusive flat fee;
however, this model is more often used for projects
rather than for recurring services.
An often-cited advantage of both the asset-based
and flat/hourly fee models is that fees are more
transparent. They are clearly shown on both plan
and participant statements as expenses rather than
as a reduction in investment returns. With that
said, some plan sponsors choose to pay this fee
directly, which not only eliminates a charge to the
participants but also provides a tax deduction for
the company.
Another advantage is it can reduce costs over
time versus the traditional commission model.
An adviser’s fee is generally negotiable and can be
reduced over time as plan assets grow; whereas,
commissions are usually determined by the mutual
funds and are not subject to change on a plan-by-
plan basis.
Conclusion
Ultimately, the decision to work with a broker
or an adviser determines a significant portion of
the expenses paid by participants. Each of the
models we have described have pros and cons, and
all of them work well in the right circumstances.
Regardless of the choice, the key is to ensure the
professional you hire has the expertise to provide
the services the plan and participants need and the
compensation paid is reasonable for those services.
Additional Reading
The More Things Change, The More They Stay The Same: Timeless Keys to Selecting Plan Service Providers
http://www.dwcconsultants.com/knowledge_center/TheMoreThingsChange.pdf
As a co-founder at DWC ERISA Consultants, Doug uses his industry expertise and collaborative approach to help clients and
investment professionals design optional plans. As a provider/vendor specialist, he is able to guide clients through their many
options to arrive at solutions that best meet their needs.
The $64,000 Question – How Does My Investment Professional Get Paid? ... continued

15.
A DWC ERISA CONSULTANTS PUBLICATION 2015 14.
Education matters. Experience matters. Having a
good TPA matters. Why is it that many professionals
in our industry don’t seem to think there is a
difference between having someone just out of high
school with only two years of experience administer
their plan versus a professional with advanced
degrees, professional designations and decades of
experience?
Most people are unaware of the requirements to
become a TPA. A while back an old friend called
and asked that exact question. He started the call
with, “this might be a stupid question, but I didn’t
know who else to call.” Not a bit flattered at being
designated as his go-to guy for stupid questions, I
waited for his question. He explained that he should
probably know the answer and asked “what does it
take to become a TPA?” There are no requirements,
I explained … zero, zilch, nada.
A good TPA provides accurate, proactive,
professional service at a reasonable price. A bad
TPA provides the opposite. A chain is no stronger
than its weakest link, and this truism applies to
organizations. Prudent advisors and fiduciaries
invest countless hours meticulously designing,
selecting and monitoring every aspect of their
retirement plans or those of their clients…except the
administration. There is a tendency among advisors,
especially those relatively new to the business, to
treat the administration as a commodity, assuming
that all the operations are substantially the same.
The reality is that nothing could be further from
the truth; I have worked with more than 90% of the
TPAs in the US, and I can assure you that there is a
vast chasm among firms.
When I ask advisors about the most important
criteria they use when recommending or selecting a
TPA, the overwhelming response is “someone that
won’t foul up my client relationship.” Talk about a
low bar! It doesn’t have to be this way. There are
great firms that provide exceptional service and
value; in most cases, it does not cost any more to
hire the best.
There is essentially the same number of 401(k) plans
today as there was five years ago. As a result, the
TPA business has become increasingly competitive.
An obvious way to be more competitive is to lower
fees. After all, who doesn’t like a bargain? However,
anyone with fiduciary responsibilities should
investigate the reasons for price disparities between
vendors. In the TPA community, the most common
way to charge less is to do less. The second most
common method is to hire less experienced people.
Sometimes they do both.
When advisors and sponsors are confronted with
this logic, the most common response is “we have
never had a problem.” My retort: How do you know?
Plan sponsors and advisors are often ill-equipped
to analyze all of the intricacies of plan compliance
and administration. When plans are reviewed the
“we never had a problem” explanation evaporates.
Earlier this year the Employee Benefit Security
Administration (the division of the Department of
Weakest Link … What’s Yours?
By Richard N. Carpenter
... “what does it take to become a TPA?”
There are no requirements, I explained
… zero, zilch, nada. The qualification for
becoming a TPA is merely the desire of an
individual to proclaim they are one.

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A DWC ERISA CONSULTANTS PUBLICATION 201515.
Attorney:
What was your criterion for recommending the discount
TPA?
Advisor:
TPAs are a commodity, so I recommend the cheapest one.
Attorney:
Were you aware that the TPA you recommended did not
maintain errors and omissions insurance?
Advisor:
No, I have been referring business to them for years, and
I never had a problem. They sometimes refer business to
me, so it has been a very good relationship.
Attorney:
Were you aware that my client’s participant data
maintained by the discount TPA is worth over $5,000 to
identity thieves?
Advisor:
No.
Attorney:
Did you ever ask the discount TPA what steps they had
taken to protect my client’s information?
Advisor:
No.
Attorney:
Let me get this straight. You knew or should have known
the TPA did not maintain E&O insurance, had taken
virtually no steps to protect my client’s sensitive data,
and performed no criminal background checks on their
employees …
Labor that oversees employee benefit plans) issued
a report, stating that 4 in10 audits performed by
Independent Qualified Public Accountants had
major deficiencies. The EBSA reviews about 3,000
plans per year, so the chances of a plan being
randomly selected are less than 1:200, or a little less
than having your personal tax return audited. The
DOL, in general, and the EBSA, more specifically,
have instituted staffing initiatives to increase the
number of auditors. The EBSA has found that 75%
of the plans it audits contain an ERISA violation of
some sort.
Consider the following nightmarish scenario: you
have referred a 100-life plan to a discount TPA,
saving them $300 in annual administrative fees. The
discount TPA shaves their fees by providing fewer
services, performed by less-qualified individuals,
and they do not invest in their infrastructure. In this
case, they cut corners on their IT systems. The TPA’s
IT system is hacked and the identities of all 100
participants are stolen.
The plan sponsor is not happy; the participants are
not happy; and their attorneys are rabid. They want
answers in addition to retribution, so you get an
invitation to provide a deposition and the 300 bucks
in savings seems foolish.
Weakest Link … What’s Yours? … continued

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A DWC ERISA CONSULTANTS PUBLICATION 2015 16.
The deposition devolves into an interrogation and
goes on for over an hour. Your decision to refer
this TPA is the worst decision you have made since
joining a Wild Turkey chugging contest while you
were in college; this hangover will last a lot longer.
It is human nature to become complacent when
things are going well. History is replete with
examples of smart people underestimating risk. The
refrain “we have never had a problem” is but one
symptom of complacency. Complacency was running
rampant in the South Florida housing market in
the late 80s. On August 22, 1992 the complacency
evaporated when Category 5 Hurricane Andrew
destroyed 63,000 homes and severely damaged over
100,000 others…in one county.
In the aftermath, it became evident that much of
the devastation could have been prevented. A grand
jury report found that “suffering was aggravated
by the systemic failure and the building regulation
process” and “we have foolishly been dependent on
the building industry to police itself.”
Recognizing that the qualification for becoming
a TPA is merely the desire of an individual to
proclaim they are one, the American Society of
Pension Professionals and Actuaries (“ASPPA”)
proactively started addressing the issue of firm
qualifications. They assembled a task force of some
of the best minds in the industry and came up with
84 best practices for TPAs and recordkeepers.
The voluntary certification process conducted in
partnership with the Centre For Fiduciary Excellence,
or CEFEX, insures that certified firms are following
these best practices.
At a minimum, before you recommend or engage a
TPA, you should ask the following questions:
1. Have their operations and controls been reviewed
by an outside party such as CEFEX, or do they
have an SSAE 16 audit?
2. Do they have E&O insurance and what are the
limits? Have they had any claims?
3. What is their quality control process? Surprisingly,
many TPAs have virtually none.
4. What steps have they taken to protect the plan’s
valuable personal data?
5. What are the qualifications of the person or team
working on your plan, and what is their caseload?
There are many other things you should know about
your TPA partner. Complacently relying on the
observation that “we have never had a problem”
is not the way to perform your professional due
diligence.
Richard Carpenter is the President and founder of USVI Pensions and Consulting, primarily focused on preparing TPA firms for
mergers and acquisitions. Prior to starting USVI Pensions and after concluding his tenure as the senior manager for Deloitte &
Touche’s Florida employee benefits practice, Richard established and ran the Technical Answer Group, Inc. (TAGdata.com) for
10 years before selling it to Wolters Kluwer Law and Business who continues to operate it to this day.
Additional Reading
CEFEX Standards of Practice For Retirement Plan
Service Providers
https://www.cefex.org/downloads/ASPPA_
Standard_of_Practice_v1.6.pdf

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Both correct! And, unfortunately, both are likely
to come up at some point in the life of a qualified
retirement plan, often at the same time. We read
about the rules that are designed to protect
participants, but those rules also extend to
beneficiaries, spouses and former spouses. As much
as we would probably all prefer to stay out of those
discussions, understanding the basics can help you
cool down potentially heated conversations.
Death and Taxes
As the saying goes, both are inevitable. In this case,
the death of a participant could potentially lead to
taxes depending on who the beneficiary is and what
he or she elects to do with the inherited account. All
of those tax ramifications could fill volumes, so we
won’t go down that rabbit hole here. Instead, let’s
focus on determining who the correct beneficiary is.
You may be thinking, “What is there to discuss? You
look at the beneficiary designation form and pay the
benefits to the person listed.” If you actually have
those designations on file, it might be that easy, but
things don’t always work out that way. In fact, there
are cases on this issue litigated every year, some even
going as far as the U.S. Supreme Court.
Perhaps an easy place to start is with some
documents that are not relevant to determining
the correct beneficiary. It often comes as a surprise
that many estate planning documents such as
wills and prenuptial agreements are disregarded in
determining who is entitled to the retirement plan
accounts of a deceased plan participant. Without
getting into the gory details, the gist is that those
documents are governed by state law and deal with
the disposition of an individual’s estate and non-plan
assets. Company sponsored retirement plans are
governed by federal law and follow their own set of
rules. So, if a family member, attorney or some other
party comes to you with a will or pre-nup, claiming
it entitles someone to your former employee’s
retirement benefits, the situation most definitely calls
for further research.
Turning our attention to what is relevant, a properly
completed beneficiary designation form is first
and foremost. But what is proper? For starters,
the form should clearly identify the participant
and plan as well as the person or persons who are
the intended beneficiaries. These could be specific
names – 100% to Richard Lawson - or may be more
general - all of my children in equal shares. Both
Family Feuding About Benefits
By Adam C. Pozek, ERPA, QPA, QPFC
Thousands of plan sponsors surveyed … the top 2 answers are on the board.
Name two sensitive subjects you prefer to avoid getting stuck in the middle of with your employees.

19.
A DWC ERISA CONSULTANTS PUBLICATION 2015 18.
would be acceptable; however, something as general
as “all of my family members” probably wouldn’t.
In general, the more specific a participant is on the
form, the more likely it is the account will find its
way to the intended recipient(s) and the easier it is
for you to figure that out. Another critical piece of
information is the participant’s signature and date.
Since participants can change beneficiaries as often
as they want, having that date is necessary to know
which designation is the most current and should be
honored.
The Newlywed Game and Beyond
The retirement plan rules specify that for a married
participant, the default beneficiary is his or her
spouse. It is possible to name someone else;
however, the spouse must sign-off (with a notary)
on the change. With recent court rulings recognizing
same-gender marriages, participants who might not
have been considered legally married in the past,
now are. Since not all those in LGBT relationships
are comfortable making it known, it is increasingly
important for plan sponsors to be aware of these
rules and seek appropriate means to obtain this
information.
Another impact of the spousal default is that a
participant’s subsequent marriage trumps any
previous beneficiary designations even if the new
spouse was involved in the previous decision. The
reason is that the spouse was not a spouse at the
time he or she agreed to it, so it doesn’t qualify as
spousal consent. In that case, the simple solution is
to have the participant complete a new designation
form and have the new spouse consent.
Back To The Dating Game
Just because a spouse is the default beneficiary
doesn’t mean it evaporates when a marriage
ends. Although some plan documents now
include language automatically revoking a spousal
designation upon divorce, it is not the case across
the board. As a result, it is highly recommended
that participants complete new designations if they
go through a divorce. With emotions running high,
you might not want to get in the middle of it; but
doing so now can prevent monumental headaches
down the road if a former spouse makes a claim.
And it happens … we see cases every year when
a participant gave half of his or her account via
Qualified Domestic Relations Order to a former
spouse at the time of divorce, forgot to change a
beneficiary designation and ended up giving the rest
of the account to the ex-spouse on death, much to
the chagrin of the rest of the family. Just imagine how
dicey it could get in the case of multiple marriages
and divorces.
One Strike And You’re Out
This is a pretty big deal because paying benefits
to the wrong person often results in the company
With recent court rulings recognizing
same-gender marriages, participants
who might not have been considered
legally married in the past, now
are. Since not all those in LGBT
relationships are comfortable making
it known, it is increasingly important
for plan sponsors to be aware of these
rules and seek appropriate means to
obtain this information.

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having to come up with the funds to pay the correct
person. Yikes!
So what happens if there is no designation on file?
The first place to look is the plan document. Most
list a default order to be used, and it usually looks
something like this:
•• Spouse (if married); then
•• Children in equal shares; then
•• Parents in equal share; then
•• The participant’s estate.
If you are still in doubt (or even if you just want
confirmation), it is a good idea to seek professional
help. Contact your consultant at DWC or maybe
your attorney. If there is still nothing definitive, it
may be possible to file what is called an interpleader
action with the court to get a judge to make the
final determination. Even if it is later found to be
incorrect, the company and the plan are insulated
for having gone through that formal process.
Conclusion
All of this leads to one central recommendation …
if you don’t have current beneficiary designations
on file and where you can readily access them,
consider updating your files. Some go so far as
to send employees a memo every year reminding
them to update their designation if they’ve had a
change in their lives, which may include marriage,
birth of a child or divorce. That can also be a
great time to remind employees of the impact of
changes regarding same-gender marriage in a non-
threatening way and without singling out anyone.
Having tight internal controls around this process
can bring cooler heads to an emotionally heated
situation and hopefully keep family feuds out of your
office.
Adam is a nationally known writer and speaker and 20+ year
veteran of the pension consulting business. He is a partner at
DWC ERISA Consultants, where he works with businesses of
all sizes and industries from across the country. He serves on
ASPPA’s Leadership Council and is co-editor-in-chief of the
Journal of Pension Benefits.
Additional Reading
Automatically Revoking Beneficiary Designations
on Legal Separation Can Lead to Plan Errors
http://www.irs.gov/Retirement-Plans/
Automatically-Revoking-Beneficiary-Designations-
on-Legal-Separation-Can-Lead-to-Plan-Errors
Family Feuding About Benefits … continued

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Few things instill that dreaded feeling quite like an
official letter from the Department of Labor (“DOL”)
or Internal Revenue Service (“IRS”). Your heart
creeps up to your throat; your head begins to spin;
and panic sets in as you wonder what in the world
you are going to do now. It doesn’t have to be this
way; and we will explore how to turn these feelings
of dread into ones of confidence.
What do the DOL and IRS have to do with my
retirement plan?
The DOL and IRS are two of the governmental
agencies that have jurisdiction over qualified
retirement plans, and together they generally audit
over 20,000 plans a year. According to the most
recent statistics provided by the DOL, there are
nearly 640,000 defined contribution plans in the
U.S. (513,000 of those being 401(k) plans), covering
more than 88 million participants with total assets
of $4.5 trillion. To put that into perspective, the
GDP of the United Kingdom is $2.7 trillion – that
is four whole countries! So even though you might
feel like the government is picking on the little guy,
their focus is maintaining the integrity of the entire
American retirement system.
Are there differences in what each agency is
responsible for?
Yes, each agency has separate responsibilities in
overseeing retirement plans.
Department of Labor
The DOL’s main focus is to ensure all promised
benefits are being provided to participants and that
plan fiduciaries are acting in the plan’s best interest
instead of their own. Specific areas of focus include
(but are not limited to) the following:
•• Verifying the timely distribution of plan notices to
participants;
•• Confirming timely deposits of employee deferrals
and/or loan payments;
•• Validating vesting in distributions to participants;
•• Confirming the prudent selection and monitoring
of investment options; and
•• Ensuring that fees paid to plan service providers
are reasonable in light of the quality and type of
services.
Internal Revenue Service
While there is some overlap with the DOL, the IRS is
primarily focused on operational aspects of the plan:
•• Are documents timely signed and dated?
•• Do the plan’s day-to-day operations exactly follow
what is written in the plan document?
•• Does the plan pass the nondiscrimination tests
each year?
•• Are plan contributions within all the applicable
limits?
I’ve heard of ERISA, but what exactly does
that mean?
The Employee Retirement Income Security Act of
1974 (“ERISA”) along with the Internal Revenue
Code include the rules that govern how retirement
plans operate. In addition, there are regulations that
provide further details on how these laws work. The
DOL is in charge of enforcing ERISA (and its related
regulation), and the IRS enforces the Code and its regs.
What can I do to help prevent an audit?
In short, you can’t. But the best defense is a good
offense – conducting self-audits, working with
No Need To “Press Your Luck” When It Comes
To Government Audits
By Karla Bomgardner, ERPA, QPA

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A DWC ERISA CONSULTANTS PUBLICATION 201521.
experienced service providers, ensuring you have
solid internal procedures in place, and taking plan-
related responsibilities seriously. To use another
cliché, an ounce of prevention is worth a pound of
cure.
By working with knowledgeable service providers,
you have already taken the first step in your strategy.
We understand this process; we’ve helped other
clients through it; we know the rules of the game
and “have your back” regarding plan compliance
issues. However, conducting an internal self-audit
helps ensure the information given to your service
providers is accurate and complete. Areas of focus
may include proper classification of different types
of compensation on your payroll system or accurate
tracking of hours worked by employees. These are
areas that are generally outside the purview of plan
service providers but still impact plan compliance.
It is also helpful for plan fiduciaries to verify items
such as their process for depositing contributions
timely (is there a backup if someone is on vacation?)
and the monitoring of fees and investment options
(is there a regular schedule or a process if a change
needs to occur?).
Self-audits and solid internal controls will “stack the
deck” in your favor.
What might trigger an audit?
First and foremost, an audit notice does not
necessarily mean something is wrong. You could
have been randomly selected because your plan has
a certain feature, and the IRS/DOL have seen a lot
of plans with that same feature handle it incorrectly.
Maybe, a participant called the DOL to complain.
Maybe a response on a Form 5500 piqued their
curiosity. Our goal in working with our clients is to
identify items that may increase the risk of audit and
either avoid them or be prepared to respond if/when
the IRS or DOL ask. But sometimes audits are just
the “luck of the draw.”
Okay, I received a request for information
letter … now what?
In a nutshell, do not ignore it! This is a great time to
use one of your lifelines, “phone a friend” and call
the service provider that assists you with your plan’s
compliance, usually your TPA (if you work with
DWC, that means us!) We have experience not only
with your plan but also with government audits in
general. We can help ensure the request is handled
appropriately.
This letter may be the first contact you receive and
will request a laundry list of documentation. If the
initial deadline is a little tight, you can contact the
auditor to request an extension. They are usually
willing to work with reasonable requests.
Alright, the auditor has all our information …
now what?
Next comes the site visit. Take special care in
determining the personnel who will interact with
the auditor. Personnel who are unfamiliar with
401(k) rules may mention items that seem small to
them, but not to the auditor. Confirm all necessary
parties will be either present or on-call to address
No Need To “Press Your Luck” When It Comes To Government Audits … continued

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A DWC ERISA CONSULTANTS PUBLICATION 2015 22.
voluntary, but it doesn’t necessarily mean the sky is
falling either. Again, this is where you can “phone
a friend” for guidance on how best to handle the
situation.
In Closing
No matter how well prepared you are, audits are
never a pleasant experience. But taking steps to be
prepared will bring you confidence in knowing your
plan is running like a well-oiled machine. There is no
need to “Press Your Luck!”
any questions. This may include company personnel,
TPA representative, attorney, CPA, payroll provider,
investment advisor, etc.
Preparation is critical to ensure a productive on-site
meeting.
•• Organization is key – make it easy for the auditor
to locate information quickly, but only provide
what is requested. This is one instance when over-
delivering isn’t always a good thing.
•• Honesty is the best policy – now is not the time
to make up answers or give false statements. If
you do not know an answer, simply let the auditor
know you will research it and get back to them.
•• Courtesy and kindness matter – auditors are just
doing their jobs and many are actually pretty nice
people. Be polite and professional, and the process
is much less likely to turn adversarial.
The site visit is over! We’re finished, right?
Not quite. The auditor will likely need to take several
additional weeks to finish his or her review back at
the office. Most audits conclude with a “no action”
letter indicating that everything is fine. Some,
however, result in a voluntary compliance letter,
outlining issues that require further attention. Suffice
it to say that addressing said issues is anything but
The Employee Plans division of the IRS is one of the few that isn’t evaluated on the
amount of fines they hand out. Enforcement is an important part of their job, but their
goal is to maintain the tax-favored retirement benefits that plans offer, not take them
away.
Karla is a Senior Retirement Plan Consultant with almost 20 years of experience in the industry. She is a member of the American
Society of Pension Professionals and Actuaries. When not working, Karla enjoys spending time with her family and watching the
Kansas City Chiefs.
Additional Reading
Control Yourself: Plan Compliance and Internal
Controls
http://www.dwcconsultants.com/knowledge_
center/ControlYourself.pdf
Results of DOL Investigations of Employee
Benefit Plans for Fiscal Year 2014
http://www.dol.gov/ebsa/newsroom/
fsfyagencyresults.html
IRS Employee Plans Examination Process Guide
http://www.irs.gov/Retirement-Plans/EP-
Examination-Process-Guide

24.
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Spotify – www.spotify.com
Spotify is, in its simplest form, a streaming music service. If you are a music fan, you
probably already know that. Launched in 2008, it is virtually prehistoric in technology
years. Adding new features on a regular basis, it acts like a startup.
Millions of songs you can stream on demand? Check. Curated playlists by mood or genre? Check.
Suggestions based on your listening habits to help you discover new favorites? Check. Pretty
routine, right? How about linking your Spotify account to your Uber account so that your music
is playing when the driver arrives? Weren’t expecting that one, were you? If you are a runner, just
launch the app and select a genre and Spotify will use the GPS in your smartphone to measure
your pace and serve up music with a tempo to match.
The music sharing tools make it easy to give and receive tips from your friends. Maybe you are
working with friends to create a playlist for a party. Maybe you’re really into Ukrainian polka
music and want to easily share new finds with others. Just create a collaborative playlist on Spotify
and share with as many people as you want – either privately through email or publicly via a link
posted to Facebook or a website or a blog or anywhere on the interwebs. Those with the link can
listen and add to the playlist at will.
Available via the web and/or your smartphone, there is a free version (includes commercials) and
a premium version at $9.99 per month (commercial-free and allows you to download music to
listen offline). There is also a family version that offers a 50% discount to other members of the
family.
CHEAPTECHTOOL#17
Plan fiduciaries are required to monitor their plans’ investment options on an
ongoing basis to ensure they continue to be prudent.
FACT | Obviously, there is no crystal ball that allows anyone to predict which funds will perform the
best over time. Instead, ERISA requires plan fiduciaries to use a prudent process to vet the available
options and choose the ones that are best suited to the participants. But that’s just the beginning.
According to the United States Supreme Court, plan fiduciaries also have an ongoing duty to monitor
the investment lineup to ensure they continue to pass muster under that prudent process. That means
documentation is important - usually via an investment policy statement describing the process and
regular meeting minutes showing the who, what, where, when and why of any decisions that were made.

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A DWC ERISA CONSULTANTS PUBLICATION 2015 24.
Marketing’s Fiduciary Responsibility
By Rick Alpern
Marketing’s Fiduciary Responsibility
Fiduciary Responsibility. What’s the first thought
that comes to mind?
When most of us hear the words, “Fiduciary
Responsibility” it is likely we think of the legally-
driven need and commitment to keep a retirement
plan in compliance. Or perhaps you may think of
the duty an investment advisor has to put their
client’s interest above all others. While others still
may associate the term with a Board of Directors
reviewing a large buyout offer and making a decision
that is best for their stockholders.
But I would guess that few of us think of our
marketing efforts when we hear the term, Fiduciary
Responsibility. Maybe we should.
Marketing done correctly should always have
a fiduciary-like conscience and viewpoint as its
underpinning.
Whether you are a small business and act as your
own Marketing Director or you have a staff of 10
moving your MarCom efforts forward, it can only
serve you well to approach your external messaging
this way. Let me give you some examples.
Marketing’s Fiduciary Responsibility to Look
Out for Your Customers
A former marketing colleague of mine used to say,
“To see how Jim Jones buys you have to see Jim
Jones through Jim Jones’ eyes.” Quirky but true.
Who at your company “owns” the customer point of
view? When you decide to rollout a new product or
service, who reviews it with the “customer” hat on?
Often times, no one is charged with this task. And
it is a mistake. Marketing is the perfect department
to place this responsibility. Your marketing person
should not only embrace new products to position
its benefits, but also to question shortcomings
and anticipate problems that might occur. Because
marketing is fundamentally all about appealing to
current and potential customers, it makes a lot of
sense to have them own this responsibility.
Marketing’s Fiduciary Responsibility to Integrity
You’d like to think every person in every corporation
operates with the mindset of, “Do the right thing
and the money follows.” But as we know, the real
world doesn’t work that way. The temptation of easy
profits or shortcuts lures some folks into making less
than ethical decisions. But what if your marketing
person was charged with consciously protecting the
integrity of the company with all client/customer
facing messaging? Of course, you must have the
right person for this position. Someone who is high
in ethics and courage. A person who can make good
choices yet not be paralyzed in his/her decision-
making. Why not your marketing person? Marketing
should already own the brand and the message.
Why not have Marketing look out for the integrity of
the message as well? Is the message too gray or too
over the line? Let Marketing have the responsibility
of being the devil’s advocate when it comes to
integrity. Make it part of the creative checklist. It will
challenge all involved in the decision to think from
this important perspective.
Marketing’s Fiduciary Responsibility to Call
“BS.”
Most of us will remember the Hans Christian
Andersen tale of the two tailors who wove the
Emperor “new clothes” that were only visible to
those who were high-class or smart enough to see
them. And the Emperor bought it hook, line and
sinker … convincing himself that the new clothes

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were beautiful. Insult to injury took place when none
of the King’s subject dared to say he was actually
naked. It took a little boy watching the parade to
shout out that the “King has no clothes” before the
Emperor realized what a fool he had been. Well.
Marketing needs to be that little boy.
Marketing has a fiduciary responsibility to call “BS”
when an idea, that is not very good, begins to gain
huge momentum just because the boss is behind
it. Sure, this is easy to say but could be hard to do
depending on the boss and size of egos involved.
But think of all of the wasted hours in developing
the bad idea, launching it and then watching it die
on the vine or cause collateral damage. And, did I
mention all of the other ideas and initiatives that will
suffer at the expense of a bad idea with momentum?
Yes, Marketing has a fiduciary responsibility to be
that kid.
Marketing’s Fiduciary Responsibility to
Employees
Employees are customers too. Sometimes
management can be so customer-focused, it misses
this fact. They need to be respected. In larger
organizations Human Resources can go a long way
to making all employees feel a part of the team
by communicating what’s going on internally and
externally. But many small businesses do not have
the luxury of HR to help close this loop. Some of the
HR communication responsibilities could fall to the
marketing person. Let me illustrate below.
When we launch an ad campaign or website for a
client, we are insistent about rolling it out to the
employees first. I am not going to tell you that it
happens every time. There are instances where
there is just not enough time or the client feels like
there are too many other things going on. But for
the really big campaigns, we fight hard to get it in
front of the employees so they are not blind-sided by
customers. And, when we communicate campaigns
to the employees ahead of the general public, the
internal reaction is ALWAYS the same: appreciative
employees. They might not love the campaign, but
they are ALWAYS very thankful that marketing/the
agency thought enough of the employees to show
them what is going out to the public before it is
launched.
In Closing
In most instances marketing’s responsibilities are
far from fiduciary in a legal sense. But imagine
your marketing department acting with that kind
of discipline, sense of ownership and passion that
fiduciaries should have? It should not only bring
clarity to who owns certain responsibilities, it also
should elevate your customer’s perception of your
company. College Basketball Hall of Fame Coach,
John Wooden used to say, “The true test of a man’s
character is what he does when no one is watching.”
Having your marketing personnel approach its
responsibilities with this fiduciary mindset will yield
strong character results that can only benefit all
involved.
Marketing’s Fiduciary Responsibility … continued
For over 30 years, Rick has worked in the advertising, sales and marketing fields and currently serves as President of
Single Source Marketing in Danvers, Massachusetts. He is an avid believer in asking questions and listening to clients in order
to achieve the best results. Visit SingleSourceMarketing.com for more information.
“The true test of a man’s character is what
he does when no one is watching.”
– College Basketball Hall of Fame Coach,
John Wooden

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Outlook for iOS -
https://itunes.apple.com/us/app/microsoft-outlook/id951937596?mt=8
This tech tip might not have much of a “wow” factor, but it made the cut here just
for its usefulness. Even the most avid Apple fan can’t help but admit that the native iOS apps for
mail, contacts and calendar are … ahem … less than inspiring. Not that email is really exciting
in the first place, but still. Given how much most of us use these three functions, as in all day
every day, one would think Apple could have upped their game. No worries now that Microsoft
has released an Outlook app for iOS, combining email, contacts and calendar into a single app.
Not only does it include built in integrations for quick setup with most popular email systems
like Gmail, Yahoo, Exchange (of course) and even iCloud, but it also allows you to quickly and
easily tie in your cloud storage from OneDrive, Dropbox and Google Drive for quick saving and
attaching of files. Since it’s a Microsoft app, opening Word, Excel or Powerpoint attachments is a
breeze.
Only at version 1.2, Outlook for iOS is still pretty young. It has plenty of room to grow and there
is some functionality that still isn’t ideal. For example, although it includes an address book,
you can’t add or edit contacts directly through the app. Once added or edited in Outlook on
your computer, for example, the change/addition immediately syncs to the app, but still. For the
added efficiency and ease of use, Outlook for iOS has relegated Apple’s native mail, contacts and
calendar apps to the Misc Utilities folder.
CHEAPTECHTOOL#21
All 401(k) plans are required to select a Qualified Default Investment
Alternative for employees that do not make their own investment decisions.
FICTION | The QDIA is completely optional. Plan fiduciaries that wish to set a default fund can
certainly select one that fits within this Department of Labor “safe harbor.” However, there are
other options that can easily pass muster under a prudent selection process that don’t check all the
boxes to officially be QDIAs. For example, a money market fund is not a QDIA framework, but in
volatile economic times like we saw back in 2009, it could still be a prudent default choice under the
circumstances.

28.
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The DWC ERISA Consultants team members collectively have 25
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and four are admitted to practice before the IRS as Enrolled
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… all our employees are required to have PTINs (Preparer Tax
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to other legal, financial and tax professionals.
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