On April 20, 2010, Mike Montgomery, Managing Principal of Montgomery Retirement Plan Advisors, was voted the Top Advisor in the U.S in one of four market categories reviewed by 401k Wire, a leading industry news source. Montgomery primarily serves client plans in the $1 million to $125 million range but was recognized in the $5 million to $15 million plan category due to his work in bringing larger market fiduciary practices to plans of moderate size.

In addition to this recognition, based on thousands of votes from a cross-section of the industry, Montgomery had previously made 401k Wire’s 2010 list of 100 Most Influential People in Defined Contribution.

Montgomery is well known to the industry, having built a 32-year track record in defined contribution plans, with 27 years on the provider side either as a pension specialist or regional manager with such market leaders as ING, Manulife (John Hancock’s parent) and Principal Financial. He founded Montgomery Retirement Plan Advisors in 2004 to serve the mid-market business community. He and his team design, implement and advise 401(k), 403(b) and public sector 457(b) plans across the United States. He is a frequent speaker at industry conferences and provides market research, pricing studies and training services to several retirement plan providers.

Montgomery Retirement Plan Advisors is a member firm of Retirement Plan Advisory Group (RPAG), the largest practice management alliance for defined contribution advisors in the U.S. Nick Della Vedova, president of RPAG said, “We work hard to attract and support a large number of superstar advisors because they expect the caliber of solutions we want to develop. Mike is one of those stars and we’re watching the growth of his firm with enthusiasm.”

Record Retention: What to Keep and for How Long

When it comes to plan-related document storage, remember that your primary goal should be to preserve materials in a format allowing for quick and easy retrieval. It’s appropriate to store plan records electronically whenever possible. Also, be sure to retain an executed copy (or countersigned copy, as applicable) of each record and not the unsigned original that may have been sent to you for signature.

We encourage you to follow your company’s internal procedures for disaster recovery for your plan documentation. Disaster Recovery plans may include protocol for offsite backup storage, retrieval, and inventory to input and track each document’s retention requirements.

While most vendors can provide reports and current plan documents, the plan administrator remains ultimately responsible for retaining adequate records that support the plan document reports and filings. In addition, you are required to maintain records sufficient to determine the amount of benefits accrued by each participant.

The Six Categories of Fiduciaries

A plan may have one or more fiduciaries. Each of the fiduciaries may have different responsibilities and many individuals/committees serve in multiple fiduciary roles. Here is a simplified list, along with brief definitions, of each category of fiduciary:

• Named Fiduciary. This party should be named in the Plan Document and is considered the plan’s primary decision maker. This fiduciary may be either an employee of the sponsor, or an independent party that, absent delegation otherwise, has the duty to control, manage, and administer the plan. Every plan must have a named fiduciary. It is not uncommon for the named fiduciary to also serve as plan administrator and trustee for a plan.
• Plan Administrator. Not to be confused with pension administrator or a hired third party administrator (TPA), this fiduciary is responsible for the plan’s government filings, making required disclosures to participants, hiring service providers, and fulfilling other responsibilities set forth in the Plan Document.
• Trustee. The person(s) recognized as having exclusive authority and discretion over the management and control of plan assets.
• Investment Advisor. A limited scope ERISA 3(21) advisor who does not have explicit discretionary control over plan assets, but may exercise a certain level of influence over the operation of the Plan by way of providing investment advice/monitoring services. This fiduciary must still meet the fiduciary standards set forth in ERISA. Montgomery Retirement Plan Advisors serves as a 3(21)(a) fiduciary for most of our clients.
• Investment Manager. A fiduciary with full discretionary powers for selecting, monitoring, and replacing plan investment options, as defined by ERISA section 3(38).
• Other Fiduciaries. Other individuals, including members of various plan-related committees appointed by the named fiduciary, as well as others whose actions may dictate fiduciary status, may fall within the definitions of fiduciary under ERISA. Thus it is important not only to monitor those individuals who are explicitly named as fiduciaries in writing, but also those that have a high likelihood of undertaking fiduciary actions on behalf of the plan. In future editions of The Fiduciary Advisor, we will address the question, “Are You a Fiduciary?”.

In all cases, the plan sponsor retains the authority to remove and replace any fiduciary, even if he/she has delegated day-to-day responsibilities to others. As a result, the sponsor/named fiduciary retains the responsibility to monitor any persons to which he/she has delegated responsibilities on an ongoing basis.

Survey Says: Participants Optimistic About Recovery

Exploring and identifying participant behavior is important for any plan fiduciary to better tailor focused communication efforts. A recent study conducted by MassMutual (of more than 1,000 participants between November 15, 2009 and January 15, 2010) found that 75.8% of participants surveyed were optimistic about the stock market, believing that performance will improve in the next 12 months compared to only 7.6% who think it will decline. Overall 70.9% of participants enjoy learning about investments compared to 8.2% who do not; 72.9% of participants believe they need to save more for retirement. In terms of approach to retirement planning in the current economy, overall 40.3% reported becoming more conservative, 32.9% became more aggressive, and 26.8% have not changed their approach. Being able to retire was the greatest concern among participants at 37.3%, compared to healthcare costs, job security, and managing debt.

Communication Corner: Participant Housekeeping

There’s nothing like a little spring cleaning! Now is a good time to remind employees to reevaluate their retirement planning in view of the recent economic downturn, whether it is to re-start deferrals or diversify from cash. Email info@m-rpa.com for copy that you can print and distribute to employees.

This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent. Montgomery Retirement Plan Advisors does not warrant and is not responsible for errors or omissions in the content of this newsletter.

Securities and investment advisory services offered through Financial Telesis Inc. Member FINRA / SIPC. Montgomery Retirement Plan Advisors and Financial Telesis Inc. are not affiliated.