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What's Hot in Small Business – Chris Crum

What's Hot in Small Business – Chris Crum
Chris Crum has been a featured writer with the WebProNews.com team and the iEntry Network of B2B Publications since 2003. Chris writes for Small Business Resources about social media, search, and what’s new for small business. Hundreds of publications link to Chris’ articles including the Wall Street Journal, USA Today, LA Times and the New York Times.

U.S. Hispanic Chamber of Commerce Concerned About Small Business Retirement Plans

U.S. Hispanic Chamber of Commerce Concerned About Small Business Retirement Plans

The United States Hispanic Chamber of Commerce (USHCC) is the country's largest Hispanic

business organization, and advocates on behalf of Hispanic entrepreneurs through a network of over 200 chambers and business associations, and over 220 major corporate partners.

The USHCC has released a paper voicing its concern about the impact of upcoming re-proposed Department of Labor fiduciary regulation on small business retirement plan coverage and benefits.

As President and CEO Javier Palomarez explains, plan sponsor companies currently have a fiduciary responsibility to act in the best interest of their employees when it comes to the investment choices that are available for a retirement plan, including using “a prudent process to select a reasonable group of investment funds and monitoring fund performance.”

Employers often depend on their plan provider/advisor to provide assistance on selection and monitoring of offered funds.

The Department of Labor may prohibit plan providers and advisors from assisting employers in the selection and monitoring of the funds in a retirement plan.

Palomarez says, “Under possible new rules, the employer would have two options: (a) find an independent expert on investments to provide, for an additional fee, guidance on the selection and monitoring of investment options, or (b) do the selection and monitoring themselves, subject to fiduciary liability if this selection is not done in a prudent manner by someone with sufficient expertise. If ‘a’ is chosen, the plan sponsor would be subject to fiduciary liability if the expert is not chosen in a prudent manner.”

The USHCC partnered with Greenwald & Associates to survey over 600 retirement plan decision makers at small businesses, finding that “far-reaching regulatory changes” like a Department of Labor expansion of fiduciary status will impede the ability of such businesses

to offer their employees retirement plan accounts. Participants needed to be either the sole decision-maker or could be part of a group of decision-makers regarding the companies’ retirement plans. Companies had to have been in business for at least two years with over $400,000 in gross revenue.

Over 80% rate the job that their current advisor or record-keeper does is very good or excellent when it comes to investment selection. Over 90% are at least somewhat satisfied with the plan’s investment options.

Over 40% of the businesses without a plan said regulation would be at least somewhat likely to cause them to charge higher fees to participants and not offer matching contributions.

About 30% of small businesses with a plan indicate it is at least somewhat likely they would drop it if such regulation were to go into effect. About 50% with a plan say it is at least somewhat likely that the regulation would result in them reducing their matching contribution, offering fewer investment options, and increasing fees charged to participants.

Roughly 50% of small businesses without a plan said regulation would reduce the likelihood of them offering a plan, and 36% said it would reduce it “greatly.”

More regulation in this case seems to mean more risk for the small business owner.


 

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