Greater audit and enforcement activity by the IRS and the Labor Department are prompting defined contribution plan executives to step up internal and external reviews of operations over the next 12 months, according to a Mercer survey.
The survey of 261 executives— primarily with 401(k) plans but also some 403(b) plans — reveals that 65% plan to conduct an internal review of plan operations, 27% expect to review plan administration with their vendor and 22% will conduct an independent compliance review, according to a news release. The percentage total exceeds 100% because some respondents identified more than one action.
“This verified that sponsors are acting more from a risk mitigation perspective — more governance-oriented and more compliance-oriented,” Amy Reynolds, a partner in Mercer’s DC plan retirement consulting business, said in an interview. The survey wasn’t restricted to Mercer clients, she said.
Sixty percent said pending fee-disclosure rules issued by the DOL will prompt some action on fees in the next 12 months. Among this group, 53% will conduct an administrative fee benchmarking study, 28% will re-evaluate who pays administrative fees, and 21% “will change from a non-transparent bundled pricing arrangement to a transparent, fixed administrative fee pricing arrangement,” the release said.
The online survey was conducted in May and June.