HR Benefit Advisors I N S I G H T I N N O V A T I O N I N T E G R I T Y

1. A focus on ERISA §408(b)(2)Regulatory developments affecting covered plans, such as defined contribution plans HR Benefit Advisors I N S I G H T I N N O V A T I O N I N T E G R I T Y

2. What is Retirement? • Retirement is the point in a person's life when they have the luxury of deciding how they will spend their day. Presentation prepared for BNHRA

3. Federal Government Concerns • Current personal savings rate is 5.0% • Average 401(k) account balance is $70,000. • Over half of Americans have less than $50,000 Presentation prepared for BNHRA

4. The Simple Fact • Many 401(k) plans are too expensive. • 70% of participants think they aren’t being charging anything. • There is an incredible fee-reduction opportunity. Presentation prepared for BNHRA

5. Department of Labor’s Focus • Plan Sponsor Fee Disclosure 408(b)(2) • Participant Level Fee Disclosure 404(a)(5) • Trend towards focusing on “Participant Outcomes” • Broadening the definition of “Fiduciary” Presentation prepared for BNHRA

6. What is your role? • A plan fiduciary’s responsibilities include the following: • Act in participants’best interests • Pay only reasonable plan expenses • Carry out duties prudently Presentation prepared for BNHRA

7. ERISA §408(b)(2) empowers you with information You will have the information to: • Understand your service provider’s compensation and services, and • Identify potential conflicts of interest Presentation prepared for BNHRA

8. Fund Fee Discrepancy • Fees are the most important determinant of long-term performance. • Vanguard S&P 500 Index Fund • Fund Charge: 0.15% • Principal S&P 500 Index Fund • Fund Charge: 1.04% Presentation prepared for BNHRA

9. Fund Fees Matter! • Over time, higher mutual fund fees lead to lower returns. • A 401k with a balance of $100,000 invested over 20 years, returns being equal but fees, the lower fund fees generate a return of $448,000 vs. the higher fund fees generating$311,000. Presentation prepared for BNHRA

10. What is your responsibility? • Review information to determine if plan fees are reasonable • Protect yourself from the prohibited transaction rule by satisfying the class exemption requirements Presentation prepared for BNHRA

11. Criteria for class exemption for plan fiduciaries • Did not know that service provider failed to provide the required information • Reasonably believed that such information was provided • Make written request for required information from covered service provider upon discovery of disclosure failure • Covered service provider must respond within 90 days of your written request • Notify the DOL within 30 days of the earlier of: • The covered service providers failure to comply; or • 90 days after the written request • A sample notice from the DOL is available to youin order to report the non-compliance • AND … Presentation prepared for BNHRA

12. Class Exemption cont…. • Acting prudently, make a determination whether to terminate or continue the contract • If information requested relates to future services and is not disclosed promptly after the 90-day period, “terminate as expeditiously as possible, in a prudent manner” Presentation prepared for BNHRA

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