401(k) Admin Advantage
W h o l e s a l e r Tr a i n i n g
June 2, 2014
Agenda
•
Introduction
– Pat Bello
•
3(16) Overview / Fiduciary Role
– Janis Winterhof
•
Product and Pricing Overview / FAQs
– Tim Bormann
– Rachel Peterson
•
Sales Positioning
– Diane Kolvek
•
Marketing Materials / Communication Plan
– Matt Ord
•
Questions?
3(16) Overview/Fiduciary Role
Presented By: Janis Winterhof
Overview
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ERISA’s Fiduciary Roles
3(16), 3(21) and 3(38)
Fiduciary Duties and Liability
Legal Aspects of Delegating Plan
Administration
ERISA’s Fiduciary Roles
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•
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Trustee
Investment Manager
Investment Advisor
Named Fiduciary
Plan Administrator
Delegated Fiduciary
ERISA’s Fiduciary Roles
Trustee
Investment
Manager
Investment
Advisor
Named
Fiduciary
Plan
Administrator
Delegated
Fiduciary
Basis in
ERISA
403
3(38)
None
402(a)
3(16), 101-103
405(c)
Scope of
Authority
Limited
Limited
Limited
Full
Limited
Limited
ERISA
Fiduciary
Type
3(21)
3(38)
3(21)
3(21)
3(16)
3(21)
What is 3(16)?
A.
B.
C.
D.
The day before St. Patrick’s Day
The area code for Wichita, Kansas
John Corrieri’s personalized license plate
A section of ERISA relating to plan
administration
What is 3(16)?
• Defines “administrator”
• Includes:
– person designated by the plan,
– plan sponsor, if the plan does not designate
the administrator, or
– person designated by the DOL
• Places responsibility for ERISA’s reporting
and disclosure requirements
What is 3(21)?
• Defines “fiduciary”
• Includes someone who:
– has discretionary authority or control over
plan management or control over plan assets,
– gives investment advice, or
– has discretionary authority or control over
plan administration
What is 3(38)?
• Defines “investment manager”
• Includes anyone who:
– has the power to manage, acquire or dispose of
plan assets,
– is registered under law as an investment
adviser or is a bank or insurance company, and
– acknowledges fiduciary status in writing
Fiduciary Duties
• Be loyal
– Act solely for in the interests of providing benefits to participants
and beneficiaries
– Defray the reasonable expenses of plan administration
• Take care: be a prudent expert
– Carry out duties “with the care, skill, prudence and diligence
under the circumstance…that a prudent [person] acting in like
capacity and familiar with such matters would use”
• Diversify investments
• Exercise obedience
– Follow the plan documents
Fiduciary Liability
• Personal liability
• DOL penalties
– “EBSA Achieves Over $1.6 Billion in Total Monetary Results in
Fiscal Year 2013”*
– FY13 EBSA closed 3,677 civil investigations with 2,677
(72.8%) resulting in monetary results or corrective action*
• IRS penalties**
– Top ten failure #4: not satisfying loan provisions
– Top ten failure #5: impermissible in-service distributions
– Top ten failure #6: missing RMDs
*www.dol.gov/ebsa.newsroom.fsfyagencyresults.html
**www.irs.gov/retirement-plans/top-ten-failures-found-in-voluntary-correction-program
Delegation=Fiduciary Protection
• Limited Fiduciary Exposure
– Delegated fiduciary retains all legal responsibility for
administrative role
– Plan sponsor’s sole fiduciary role for delegated duties
is hiring and monitoring the delegated fiduciary
• Limited ≠ Eliminated
– Delegation creates co-fiduciary relationship
– Plan sponsor cannot avoid fiduciary role
401(k) Admin Advantage Overview
and FAQ’s
Presented By: Tim Bormann & Rachel Peterson
Product Overview
Participant Notice Distribution Services (Level 1)
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Participant Statements
Participant Fee Disclosures
Blackout Notices
Safe Harbor Notice
ACA, QACA, EACA Notices
Summary Plan Description
Summary Annual Report
QDIA Notice
Missing Participant Services
Product Overview
Transaction Processing Services (Level 2)
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RMD Notices and Payouts
Termination Packet Delivery
Involuntary Force-outs
Separation of Service Distributions
Loan Distributions and Monitoring
Hardship Distributions and Monitoring
In-Service Distribution Requests
Management of Unclaimed checks
Product Overview
• Full Service options
– Level 1 – Notice Distribution
– Level 2 – Transaction Processing
– Both Level 1 and Level 2
• TPA options
– Level 1 Only
• Additional Services
– Qualified Domestic Relations Orders (QDRO) Review
– Enrollment Book Delivery to Participant Homes
Client Pricing Strategy
• Fully Electronic
– 85% or greater of participants have electronic
delivery
– Reduced Cost
• Partially Electronic/ Paper
– Less than 85% of participants have electronic
delivery
– Higher Cost
3(16) Fee Schedule - Billed
Services Provided
Base
Fee
Per Participant Fee
Per Participant Fee
(Fully Electronic
Delivery)
(Partial Electronic
Delivery)
Notice Distribution
$500
$3.00
$8.00
Transaction
Processing
$600
$1.00
$4.00
$1,100
$4.00
$12.00
Both
Participants are defined as Eligible Participants plus former employees with balances.
Requirement for electronic delivery rates: A minimum of 85% of participants must
receive information electronically and email addresses must be provided.
3(16) Fee Schedule - Wrapped
Plan Size
Notice
Delivery
Transaction
Processing
Both
Less than $500,000
Billed
Billed
Billed
$500,000 - $1M
10 bps
5 bps
15 bps
$1M - $2M
5 bps
5 bps
10 bps
Over $2M
Custom
Custom
Custom
Rates shown above are for electronic delivery. If partial electronic delivery is required, the
costs shown above will increase by 5 bps. If both services are selected, the total cost will
increase by 5 bps rather than 10 bps.
Custom pricing requires a minimum increase of 5 bps.
Additional Services
We offer these services for additional fees. They will be
billed as indicated below:
• QDRO Fees - $500.00 for review and approval services
– Charged to Participant account
• Enrollment Books mailed to participant homes will be charged
an additional $1.00 per book.
– Billed to Sponsor unless over $2M in assets then can be
wrapped
FAQ – What else should I know?
What is available as of 7/1/14:
– Proposal will include Product Materials and Fully
Electronic Pricing
– New RSA Addendum (Recordkeeping Service
Agreement)
– Co-Fiduciary Coverage
FAQ – What else should I know?
What is not available:
– Plans with outside assets
– 457 plans and I(k) plans
– Notices are only available in English
– Transaction Services (Level 2) for TPA plans
– No A’La Carte pricing
– Not currently available to Existing clients
– EPIC clients – service is not offered
FAQ – Setting Expectations
Requirements upon signing up for service:
– Participant Email addresses
– Payroll Information
– Plan Documents/Loan Policy
– Force-out Agreement with Frontier Trust
– Vesting Validation
– TPA clients – Amendments, Eligibility and Notices
are critical
Sales Positioning
Presented By: Diane Kolvek
Consultative Solutions
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•
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Limited competition
New conversations with advisors
Allows for strengthened TPA relationships
Two tiers of service for unique needs and
flexibility
• Extremely affordable solution
Advisor Value Positioning
• Give a compelling reason to move a plan
• Offers differentiator for new prospects
• Advisor can focus on growing practice
Plan Sponsor Value Positioning
• Simplicity – takes function off plate
• Peace of mind – solve regulatory
compliance worries
• Ease of doing business – one source
• Cost savings – outsourcing vs employee
TPA Value Positioning
• Creates partnership recognizing mutual
strengths
• Addresses TPA limitations to offer 3(16)
due to cost of liability insurance
• Positions TPAs to do what they do best
See how happy this advisor is?
401(k) Admin Advantage Campaign
Messaging
Presented By: Matt Ord
Overall Campaign Message
“401(k) Admin Advantage brings Simplicity, Ease of Doing
Business and Peace of Mind to Plan Sponsors by taking
on the burdens of day-to-day plan administration and
minimizing plan risk while enhancing Advisor and TPA
relationships.”
Plan Sponsor Messaging
“Mutual of Omaha will act as a co-fiduciary with plan
sponsors by taking on the burden of certain day-to-day
administrative duties, making it easier for them to focus
on building their business”
TPA Messaging
“Mutual of Omaha will work with TPAs to offer
complementary services that fill in the gaps in the TPA
offering, so that together we can provide the best possible
retirement solution for the customer. Mutual can provide
notice distributions while TPAs provide transaction
services, creating a complete service offering for plan
sponsors”
Marketing Materials
Marketing Materials (continued)
Marketing Campaign Timeline
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6/4:
6/12 :
6/12:
6/13:
6/16:
6/16:
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Tier One Advisor Mailing (top 25):
TPA Announcement
Advisor Teaser Email: http://mooitg.mutualofomaha.com/esp/e2328/
Public Relations Outreach (exclusive meeting with 401(K) Wire)
Sellretirementright.com promotional content goes live
Press release disseminated to all 401(k) trade publications
401(k) Admin Advantage Ad published in NAPA Net Magazine’s
Summer Issue
– 6/12- Wooden In-box mailing First Flight
– 6/16- Wooden In-box Mailing Second Flight
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Tier Two Advisor Mailing (following 50):
– 6/23-Envelope Mailing First Flight
– 6/30- Envelope Mailing Second Flight
Marketing Resources
• The Internal Navigator Blog:
http://blogs.mutualofomaha.com/rms/messageplaybooks/401k-admin-advantage-playbook/
• RP Marketing: RP_Marketing@mutualofomaha.com
Questions
For more information contact your
Regional Sales Director