PLANADVISER - November/December 2018 - 12

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Addressing Participant Complaints
If a sponsor does not respond, it could risk a civil and/or DOL lawsuit
PARTICIPANTS do lodge complaints
against their retirement plans from
time to time, and all of these should be
addressed, experts say.
If a retirement plan sponsor ignores
a participant complaint, that participant
is liable to turn to the Department
of Labor (DOL) on his own or hire
a lawyer who will do so on his behalf,
says Blaine Aikin, executive chairman
of Fi360.
" More than 60% of the audits that
result from participant complaints
result in action, which could include
civil or criminal penalties and/or
direct the sponsor to pay the participant's
attorney fees, " he says. " So,
the sponsor could end up facing not
just private class action lawsuits but
lawsuits by the DOL as well. The plaintiffs
are becoming more successful
and sophisticated. Their attorneys are
becoming quite skilled at drilling down
on what resonates with the courts. "
Common complaints include a lack
of access to education or resources
about
the plan, says Josh Sailar, an
investment adviser with Miracle Mile
Advisors. " Such complaints have merit, "
he says. " Participants should always
be able to have questions about their
plan answered, be that through online
resources or the ability to reach out to
a person. "
Another complaint participants
often voice is that they have no access
to their funds, should the plan not
permit loans or hardship withdrawals,
says Tom Conlon, head of client relations
at Betterment for Business.
Kevin Haskell, a partner with
Aegis Retirement Partners, agrees,
citing that as his firm's most common
complaint. " Due to IRS and plan rules,
many employees are unable to take
a distribution while they are still
employed, " he says. " Many plans also
don't offer a loan provision, or, if they
do, some plan sponsors restrict loans
to only one or two outstanding at a
time or restrict the availability to only
hardship withdrawals. "
Another frequent complaint of
participants, Conlon says: " There are
also some participants who are hyperconcerned
about fees. If you have a lot
of participants complaining about fees,
you might find yourself litigating with
them-it's very common for participants
to sue fiduciaries over fees. "
He stresses having a process to
determine whether fees are reasonable.
With this in place, " you have less
to be concerned about, " he says. " If you
don't have the necessary tools to do
this rigorous analysis, hire an ERISA
[Employee Retirement Income Security
Act] 3(38) fiduciary to provide assurance
you are acting in the best interest
of participants. "
The best way to avoid questions
or complaints about fees is to be fully
transparent, Haskell says. " We spend
considerable time educating our plan
sponsors and plan participants on how
fees are applied, " he says. " Once participants
are fully aware of all the rules
and fees associated with their retirement
plans, they tend to participate at
higher contribution levels. "
DWC - The 401(k) Experts, of St.
Paul, Minnesota, responds to questions
about fees in person, says Keith Clark,
managing partner. -Lee Barney
12 | planadviser.com November-December 2018 Art by Linda Liu
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PLANADVISER - November/December 2018

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