Ask the Experts August 31, 2021

Why Does a 457(b) Plan Not Need Fidelity Bond Coverage?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

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“I work in the benefits department of a private health care provider. Our 403(b) and 401(a) plans have fidelity bond coverage, but our 457(b) plan does not. Should I be concerned about this?”

Charles Filips, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

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The reason your 403(b) and 401(a) plans have fidelity bond coverage is likely due to the fact that they are subject to the Employee Retirement Income Security Act (ERISA). Fidelity bond coverage is required under ERISA section 412. Since 457(b) plans are generally not subject to ERISA (as governmental, non-qualified church-controlled organization, or top hat), such plans do not need to comply with the fidelity bond requirement under ERISA section 412. However, you should probably ask your fidelity bond provider if it would issue coverage against employee fraud/theft/dishonesty for your 457(b) plan to see what they say—it would be a good idea to have coverage for such a liability to be consistent across plans.  Note, too, that fidelity bond coverage is not the same as fiduciary insurance.  For more information on fidelity bond coverage, check out our Ask the Experts column on the subject.

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

Products August 30, 2021

Transamerica Releases Retirement Plan Exchange Platform With UBS

The exchange is primarily geared toward small and midsized businesses and will be available solely through UBS Financial Advisors.

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Transamerica has announced that it has launched a new Retirement Plan Exchange featuring the UBS Retirement Plan Manager (RPM) program.

The Exchange is available solely through UBS Financial Advisors. UBS RPM is an advisory program that offers discretionary investment management, with UBS acting as an investment manager under Section 3(38) of the Employee Retirement Income Security Act (ERISA). In addition, TAG Resources will serve as the plan’s 402(a) and 3(16) fiduciary and manage the plan’s day-to-day administrative duties.

“UBS is excited to introduce business owners to a powerful workplace retirement plan solution that offers similar services and economies of scale that are typically only enjoyed by large corporations,” says Gene Silverman, executive director, head of retirement plan services, at UBS. “The services included in the Exchange enable employers to retain expert plan service providers to assist them in carrying out their fiduciary responsibilities and allow them to spend more time running their business. For employees, the timing couldn’t be better as they are likely eager to save through a workplace retirement plan coming out of one of the most challenging economic times of their lives.”

The exchange is primarily geared for small and midsized businesses, and the firms say it allows employers to reduce their administrative burden, mitigate certain risks and benefit from economies of scale. Participating employees enjoy the benefits of a workplace retirement plan and the tax-deferred advantages of a typical 401(k) plan.

“Transamerica is thrilled to partner with UBS on our Retirement Plan Exchange. UBS is known for its investment expertise. Transamerica is a pioneer for pooled retirement plans with 20 years of experience. Together with TAG Resources, we share a common vision of making it possible for more companies to offer retirement plans to their employees,”€ says Kent Callahan, CEO of workplace solutions for Transamerica. “By offering this Retirement Plan Exchange, we are demonstrating our shared commitment to finding innovative solutions that meet the needs of UBS’s business owner clients and their employees.”

Transamerica notes that the Exchange is not a multiple employer plan (MEP). Unlike a MEP, certain plan qualification and ERISA requirements are applied at the individual plan level. An employer participating in the Exchange retains certain fiduciary responsibilities, including responsibility for retaining and monitoring the 3(16) plan administrator, for determining the reasonableness of its fees and for periodically reviewing the Exchange as a whole.

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