Recent Supreme Court ruling may change your 401(k) from an asset to a liability
Birmingham, AL (March 25, 2008): On February 20th, the U.S. Supreme Court ruled in LaRue v DeWolff, Boberg & Assoc. that 401(k) plan participants are now permitted to individually sue plan sponsors over ERISA breaches in the administration of their plan.
LaRue, a Texas management consultant, sued his employer, DeWolff, Boberg & Associates Inc., to regain $150,000 that he claimed was lost from his 401(k) account because plan administrators disregarded his order to move funds to different investment options.
LaRue claimed he had tried to move his retirement funds from equities into cash investments, because of the stock market turbulence in 2000, and in the wake of the September 11, 2001 terrorist attacks.
Prior to the Supreme Court ruling, employers who provided 401(k) retirement plans were only subject to class action suits which limited claims to large employers. The LaRue decision has changed the landscape allowing individual participants to sue their employers for losses claimed in their individual accounts.
Unfortunately the majority of small and mid-sized employers are not fully aware of their responsibilities as fiduciaries. According to Larkspur Data Services, a financial research firm who’s services monitor 401(k) filings made by employers across the nation, approximately 300,000 401(k) plans, covering nearly 25 million plan participants, contain significant compliance and fiduciary flaws.
"Many employers are under the impression that their TPA, attorney, and financial advisor are responsible for plan compliance. Although these vendors play an invaluable role in the process, ERISA clearly states that these vendors are not fiduciaries," states Lee Lichtenstein, CEO of amsource, a Birmingham, AL based human resources administration company that provides 401(k) co-fiduciary and administrative services to employers.
The Department of Labor defines a fiduciary as anyone with "discretion over the function of the plan." In smaller companies, the CEO and CFO are typically the fiduciaries. ERISA regulations outline that key processes like monitoring expenses and investment returns have to be performed by fiduciaries. "The law is clear that fiduciary responsibility is not an "event" it is a "process, and the liability for breaching those responsibilities can be personal," adds Lichtenstein.
"We are in unique position in marketplace in that we become 401(k) co-fiduciaries with our clients. From what I have seen, amsource is the only company in the country that offers a stand-alone payroll service, similar to the national providers, with the option of adding a 401(k) plan where we are co-fiduciaries. Individual clients maintain the flexibility to design the plan features and benefits, although we become the plan sponsor, administrator, and co-fiduciary along with administering their payroll."
Since 2001, the Department of Labor, and other agencies, have initiated over 12,000 lawsuits against plan sponsors who’ve failed to adhere to ERISA guidelines. Plan participants have also initiated class action suits claiming damages for failure to comply with ERISA regulations against some of the largest, well-respected companies in America, such as Boeing, New Your Life Insurance, Caterpillar, International Paper and Lockheed Martin.
amsource® achieves SAS 70 TYPE II Certification for Secure, Reliable, and Effective Operations
Rigorous certification by a leading auditing firm reaffirms amsource's Employer Operating System2 sets the standard for high quality operational and internal control processes
Birmingham, AL December 1, 2006 - Having addressed the rigorous requirements for the Statement on Auditing Standards No. 70 (SAS 70), human resource outsourcing (HRO) provider amsource, today announced it has achieved the SAS 70 Type II certification, one of the most stringent auditing standards for service companies. The SAS 70 Type II certification designates that the amsource Employer Operating System2 delivers a fully secure, reliable, effective operating environment with the proper controls for administering their HRO services which include time and attendance, payroll and benefits administration, and HR compliance and administrative services.
These standards of quality in operations are an indication of amsource's commitment to the sound management of financial transactions and critical data for their clients. The independent auditor Tidwell DeWitt, LLC, performed the SAS 70 Type II audit through meticulous reviews and tests of amsource's operational procedures and operational controls. SAS 70 was developed by the American Institute of Certified Public Accountants (AICPA) for service providers who wish to prove a high level of control effectiveness to independent auditors, and has become one of the most widely recognized auditing standards for service companies.
SAS 70 is the authoritative guidance that allows service organizations to disclose their control activities and processes to their customers and their customers' auditors in a uniform reporting format. The SAS 70 Type II audit included comprehensive reviews and tests of amsource' infrastructure, including financial and user controls, physical and electronic security measures, backup and recovery procedures, customer setup, network security, maintenance procedures, infrastructure change management, environmental safeguards, communications, customer service, management and insurance coverages.
"Organizations requiring secure, financially sound, reliable operations and transactions will be reassured by amsource's SAS 70 Type II certification," said amsource President, Lee Lichtenstein. "Our clients have the assurance that our Employer Operating System2 and our staff that supports it are performing well beyond the standards required for our industry. By obtaining both the SAS 70 and ESAC (Employer Services Assurance Corp) certifications, amsource is in an elite group of human resource outsourcing firms in the U.S."
amsource® Earns Prestigious ESAC Accreditation, Highest Achievement for a Professional Employer Organization
Alexandria, Va. (January 6, 2006) - amsource®, a human resource outsourcer (HRO) and professional employer organization (PEO) headquartered in Birmingham, Ala., has accomplished the most prestigious performance achievement for a PEO - accreditation by the Employer Services Assurance Corporation (ESAC). This signifies that the company continuously meets the highest standards applied to firms in the $51 billion PEO industry.
"The ESAC Board is proud to announce the accreditation of amsource®," said Jane McCoggins, ESAC's executive director. "This company's achievement not only demonstrated its compliance with important ethical, financial and operational standards but also its commitment to the sound growth, dependability and credibility of the PEO industry."
amsource® is one of only 24 PEOs that have achieved ESAC accreditation. The company underwent rigorous examination by ESAC's outside experts, who will continue to monitor the company's compliance with the standards to maintain its accreditation.
"We have worked hard over the past 15 years to build the amsource® Employer Operating SystemSM, an operating system that consistently executes on our promises to clients. I get to work with an incredible group of people at amsource®, and take great pride in their ability to obtain the ESAC accreditation," said Lee Lichtenstein, president/CEO.
amsource® is a member of the National Association of Professional Employer Organizations (NAPEO). Leaders of NAPEO established ESAC 10 years ago to build trust and provide assurance to PEO clients, worksite employees, insurers, taxing authorities, state and federal regulators, and the general public. ESAC provides the ability for PEOs of any size to have independent verification that their companies are being operated legally and in a financially stable manner by competent and ethical leaders based on sound professional practices.
As an accredited PEO, amsource® is backed by financial assurance through the ESAC Client Assurance Program. This assurance consists of an individual $1 million surety bond plus a $3 million excess bond covering all accredited PEOs. In early 2006, the excess bond amount will be increased to $5 million, providing a total of $6 million in financial assurance.
ESAC is the only bonded, independent and qualified assurance organization for the PEO industry. ESAC's PEO Client Assurance Program is similar to the assurances offered by the FDIC for the banking industry. The program provides for reimbursement to clients, worksite employees, taxing authorities, and insurers in the unlikely event of a default by the PEO to pay wages, payroll taxes, contributions to employee retirement plans, workers' compensation premiums and group life and health insurance premiums or plan contributions. ESAC provides an unprecedented level of assurance, because during its 10 years of operation, there has never been a default involving an accredited PEO.
Increasingly, states with PEO licensing or registration statutes are recognizing ESAC accreditation as an alternative for their compliance requirements. Many state regulators regard ESAC accreditation as an effective, efficient method of performance monitoring and verification.
"NAPEO applauds Lee Lichtenstein for his leadership and commitment that led his company to achieving accreditation," said Milan P. Yager, executive vice president of NAPEO. "He joins an elite corps of PEO leaders who recognize that accreditation builds trust in the PEO marketplace and among regulators and insurers. This is a remarkable achievement within a remarkable industry."
amsource® services mid-sized companies across the Southeast through a network of select financial planners, brokers and insurance professionals. The amsource® Employer Operating SystemSM consolidates the administration of benefits, payroll and other HR functions providing a more efficient model to the traditional "one-to-many" vendor relationships, so that internal HR professionals can focus on attracting and retaining A players.
For more information on the ESAC accreditation program and the PEOs that are accredited, go to http://www.esacorp.org/main.asp. To learn more about the PEO industry and NAPEO, visit www.napeo.org.
NAPEO, the National Association of Professional Employer Organizations, is the recognized "Voice of the PEO Industry.®" NAPEO has 345 PEO members found in all 50 states, representing more than 70 percent of the revenues of the $51 billion PEO industry. PEOs enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers' compensation. PEO clients focus on their core competencies to maintain and grow their bottom line. To learn more about the PEO industry and how PEOs contribute to small businesses' success, visit the NAPEO Web site: www.napeo.org
The Employer Services Assurance Corporation (ESAC) is an independent, non-profit organization established in 1994 by NAPEO to build trust in PEOs and provide assurance to their clients, worksite employees, insurers, taxing authorities, regulators and the general public. Accredited PEOs currently serve clients and employees representing over $13 billion in annual wages. Annual fees paid by participating PEOs provide funding for ESAC programs. To learn more about ESAC, visit www.ESACorp.org.
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