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Q: What are some of the key fiduciary challenges 401(k) plan sponsors face and how can financial professionals help?

Watch as Guardian retirement industry expert Steve Davis answers this question and addresses how financial professionals can help plan sponsors better understand their fiduciary responsibilities and meet their fiduciary duties. For more information, click here.

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Q: What are the primary fiduciary responsibilities of a plan sponsor?

(New York, NY)

A: Every 401(k) plan must have at least one named fiduciary, who has the responsibility of administering the plan and selecting investment options. For most plans, the plan sponsor serves that role. A fiduciary is any person who is 1) named in the plan document as a fiduciary or is appointed as a fiduciary, 2) Exercises discretionary authority or control over plan assets and/or the management of the plan, or 3) provides investment advice for compensation with respect to plan assets. Fiduciaries must abide by certain rules of conduct including:

1. Act solely in the interests of plan participants and beneficiaries. 2. Act with care, skill, prudence, and diligence. 3. Diversify the investments of the plan. 4. Administer the plan in accordance with the plan documents and instruments. 5. Evaluate the reasonableness of fees and charges paid by the plan.

Some of the best ways for a plan sponsor to deliver on their fiduciary responsibilities is to document their decisions, establish an investment policy statement, select & monitor investment options, and communicate and educate plan participants. Many small business owners should work with their financial professionals to determine how different service providers can help meet and mitigate their fiduciary responsibilities.

Q: What's the best way to engage a business owner who currentlyoffers a 401(k)?

(Wilmington, DE)

A: One of the best ways to engage a plan sponsor is to offer a free retirement plan assessment. This can come in the form of asking probing questions about the various features and benefits of the current plan from fiduciary support, plan design, fee disclosure support, compliance & administration, to investment features and participant engagement. Does the plan have an investment policy statement and does the sponsor get support selecting and monitoring investment options? Is the plan's design optimizing tax benefits for the business owner? Have they ever failed a compliance test (i.e. ADP/ACP Test?). Are regularly enrollment and education meetings scheduled to help encourage participation and savings? Is the financial professional providing an annual plan review? These types of questions can help you gain stronger understanding of the current product and services being utilized by the plan and identifying potential problem areas of the business owner.

Q: What's the difference between an ERISA Section 3(21) and an ERISA Section 3(38) fiduciary?

(San Jose, CA)

A: When evaluating what fiduciary support services to offer to business owners, it's important to understand that fiduciary support services exist at both the plan-level, to help sponsors monitor and select investment options made available to their plan participants, and at the participant level, where investment decisions are made on behalf of plan participants for their individual retirement account (typically done within a managed account). Whether at the plan-level or at the participant-level, there are different ranges of fiduciary support that most retirement solution providers make available. ERISA Sections 3(21) and 3(38) outline the obligations and responsibilities of an ERISA Fiduciary. An ERISA Section 3(38) fiduciary provides discretionary investment management of assets whether at the plan or participant level. A 3(21) fiduciary provides non-discretionary investment advice services - i.e., they provide recommendations that must be accepted by the plan sponsor/ plan fiduciary. Additionally, 3(21) fiduciaries can provide services that include a negative election process that helps to automate the recommendation process. All are acceptable solutions to help mitigate fiduciary risk for business owners.

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About Ask The Experts

Ask the Experts is an educational video series, hosted by Financial Planning that features an engaging Q&A with financial and retirement industry experts. This series, sponsored by Guardian, addresses questions and discusses how financial planners can succeed in today's 401(k) marketplace, including small-market needs, strategies, service and support as well as resources. Watch these videos to learn more.

Check out Guardian's additional resources:
> Large Plan Services for Small Plan Clients
> Help Plan Sponsors Understand their Fiduciary Responsibilities
> Learn More about Guardian Retirement SolutionsTM

Important Information

The Guardian Advantage® group variable annuity contract and The Guardian Choice® group variable funding agreement are issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation whose principal place of business is 7 Hanover Square, New York, NY 10004. GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY.

Guardian does not issue The Guardian Choice® and The Guardian Advantage® and does not guarantee the benefits they provide.

Guardian Retirement Solutions™ refers to the administrative support services, including participant recordkeeping as well as marketing, enrollment, and educational materials, provided by GIAC in conjunction with the individual and group retirement products issued by GIAC.

This website is not intended by The Guardian Life Insurance Company of America, The Guardian Insurance & Annuity Company, Inc. (GIAC), or any of its employees or agents to be considered as investment, tax, or legal advice. Please consult your investment, tax and legal advisors for guidance and information that is specific to your plan.

Investments offered under The Guardian Advantage® group variable annuity and The Guardian Choice® group variable funding agreement are not deposits or obligations of, or guaranteed or endorsed by, any bank or depository institution, nor are they insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other agency. They involve risk, including possible loss of the principal amount invested.

SWBC Investment Advisory Services LLC (SWBC) and Stadion Money Management LLC (Stadion) are not affiliates or subsidiaries of The Guardian Life Insurance Company of America (Guardian) or The Guardian Insurance & Annuity Company, Inc. (GIAC). A plan fiduciary must contract directly with SWBC and Stadion to obtain the services of SWBC and Stadion.

For J.D. Power 2013 Call Center Certification ProgramSM, visit www.jdpower.com.

Independent TPAs in the network are not affiliates or subsidiaries of GIAC or The Guardian Life Insurance Company of America.

The Guardian Insurance & Annuity Company, Inc., 7 Hanover Square, New York, NY 10004-4025.

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