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Page 4 POST-GAZETTE, OCTOBER 26, 2012 I HaveNever Seen Them Before! by Joseph S. Vita Historically, little has been sponsors will see fees for and how your plan's invest- required regarding the which they were previously ments perform relative to 4.---/ disclosure of fees within re- unaware they were being others in their peer group, by Sal Giarratani tirement plans. From plan investments to record keep- ing and third-party adminis- tration serv!ces, there are several types of fees involved in maintaining a retire- ment plan and uncovering the fees for all these compo- nents may require substan- tial effort. The U.S. Depart- ment of Labor recently en- acted new regulation that became effective July 1, 2012, with the goal to in- crease fee transparency. For plan sponsors and plan par- ticipants, this is fantastic news. However, the new regulations come with some caveats as well. By July 1 St, plan sponsors had to receive an ERISA Section 408(b)(2) disclosure notice from all "covered service providers" -- which typically includes invest- ment providers, bundled record-keepers, third-party administrators, broker- dealer and Registered Invest- ment Advisors. This rule affords plan sponsors (often a business owner or HR per- son) an exemption from the prohibited transactions rules under ERISA which ordi- narily prevents payment by a plan to a party in interest, provided that the arrange- ment for services is neces- sary and deemed "reason- able" when considering the compensation paid and ser- vices provided. To assist plan sponsors with assessing the reason- ableness of service provider arrangements, this new fee disclosure must describe both direct and indirect com- pensations that covered ser- vice providers receive from providing services to an ERISA qualified retirement plan, as well as sub-transfer agency fees and overlooked or not understood previ- ously. As a result, most plan charged and this may lead to questions. Arm yourself and learn about different fees, especially if you are a busi- ness owner and want to be able to clearly and accu- rately answer questions from your employees. Additionally, new partici- pant fee disclosures under ERISA Section 404(a)(5) re- quire that all existing and newly eligible employees receive an initial annual disclosure form plan spon- sors, generally effective August 30, 2012. In addition to an annual disc!re I participants must receive a quarterly disclosure state- ment containing specified fee information, generally effective November 14, 2012. This level of fee transpar- ency is anticipated to cause concern amongst partici- pants who may be seeing fees and investment ex- pense ratios for the first time for funds they are invested in. This begs the question of how to prepare yourself, as an ERISA plan sponsor (often a business owner or HR), your organization's retire- ment plan. Under ERISA, a fiduciary can be personally liable in the event improper actions occur within the plan. It is your responsibility to make sure that you un- derstand your duties includ- ing your fiduciary responsi- bilities under these two new fee disclosure rules. If you have not had a recent analy- sis of your plan, the first step should be talking to your current provider and at least one outside independent ven- dor. It is important to speak with an Independent party because they will be able to provide an unbiased analy- sis. This can help you evalu- ate the reasonableness of your retirement plan's fees This Thanksgiving make a difference by donating pet food and supplies. Help Freeway support the MSPCA of Boston. Drop your donation off at the Post-Gazette 5 Prince St., North End, Boston Monday-Friday 9:00 AM to 5:00 PM or at the Post-Gazette Satellite Office 35 Bennington St., East Boston Don't Forget That Tuesdays 10:00 AM to 3:00 PM Tough Times Thursdays 11:00 AM to 2:00 PM Ipmact Them Too! Food * Toys * Grooming supplies Beds, Blankets, etc. For a complete listing, please visit www.MSPCA.org/Adoption/Boston/Donate/Boston-Adoption-Wishlist.html Deadline date to donate is Thursday, November 15 For further details call the Post-Gazette office at 617-227-8929 Your generosity can go a long way in supporting the needs of these deserving animals! This approach, in essence, should provide an "apples to apples" comparison of your current service providers in- vestment options against what is potentially available to you. Next, talk to your record-keeper and third party administrator and ask how they will be handling the new fee dis-closure requirements so you can take steps to pre- pare our 404(a)(5) participant disclosure. Talk with your financial advisors as well and make sure there is a procesS for aa Sg+: quens that may arise when this information is disclosed. If your plan service providers cannot provide you with the required fee disclosures, it is your fiduciary responsi- bility to determine if con- tinuing a relationship with your provider is reasonable. If not reasonable, then you should consider termination of that service arrange- ment. If you are a partici- pant, you should become in- formed about what informa- tion your plan is required to disclose and how to interpret the various fees and related disclosures. First, if your plan has a financial advisor you should learn whether they are acting in a fiduciary capacity as an investment advisor and can provide in- vestment advice on a level fee basis, or whether they are acting as a broker on a commission basis. It should go without saying, but the brokers' incentives might not align with your goals. Request to sit down with your plan's financial advisor (if possible); if you are pay- ing for the service, you should take advantage of it. Ask them about all the associated fees and how the plan is performing in addition to the performance of your own investments. Also consult an outside source and compare per- formance of similar invest- ment alternatives and related fees. If you think the plan warrants review, express your particular con- cerns to your plan sponsor, as they have a fiduciary responsibility to ensure they are acting in the best inter- est of the participants. The best part about these changes is that it presents you, as a participant, with the perfect opportunity to learn about the benefits of your plan and understand how it works. Information will be available to an extent never before seen, and if you ask the right questions you will be able to get informa- tion on the whole scope rather than just the portion the Department of Labor is mandating. If can be easy to procrastinate when thinking about a retirement vehicle, it's not a nearterm source of income, but your retire- ment plan may be the larg- est source of income in your retirement. Excessive fees (Continued on Page 12) Soon it Will I love politics and have been a political activist since 1960 when, as a 12-year- old from Boston's South End, I organized the neighborhood kids in a de facto "Kids for Kennedy" group. We would parade around the neighbor- hood streets yelling, "All the way for JFKI" During one of these marches we stopped outside Bernstein's in Worcester Square bring- ing our campaign to all those taxicab drivers and City Hospital staff inside drink- ing their lunches. My father, by then, had already worked 16 of his 35 years as a medi- cal worker at the hospital. Everyone knew him and, like-wise, everyone got to know me too. My first political moment was in 1955 when, as an 8 year old, I met the legend- ary James Michael Curley during his last run for mayor in 1955. He failed to make it into the general election but still picked up a mil- lion votes as an 81-year-old candidate. He told me I should run for office. I finally did in 1995 over in Quincy when I ran for School Com- mittee. I didn't get a million votes but did pick up, count 'era, 2,232 votes. My great- est Rocky Balboa moment in politics was on January 19, 2010 when the all but written off Scott Brown won an upset victory over a very surprised Martha Coakley. Over the years of doing poli- tics, I've been more like a .500 big league pitcher. I win. I lose. I've helped Demo- crats. I have helped Repub- licans. I also have supported independent campaigns too. When it comes to ideology, I am pretty much a moderate. I have never aspired to the extremes of the spec- trum. I am not a kneejerk anything. My heroes grow- ing up were mostly Democrat until George McGovern came along in 1972 and seemed to radicalize the party into a bunch of left wing nuts. I thought Jimmy Carter was a nice guy but horrible as Commander in Chief. I slowly became what a member of Democrats referred to as a "Reagan Democrat'. Still, to this day, I see myself as a prot6g6 of both Jack and Bobby Kennedy, perhaps, more Bobby. His short-lived presidential cam- paign of 1968 gave me so much hope for the future, but all that hope seemed shattered in all that vio- lence during that year. Back in 1992, I liked Ross Perot. In 1996, I slid more to the right and Pat Buchanan because I was tired of the same old rhetoric that never fixed things. Last time around when I had a chance to vote for President Obama, I passed on it. I didn't think he was ready. After these past almost four years, I was proven correct. I settled for All be Over McCain in 2008 knowing he was going down. This time around, Romney may get my vote but I am less happy with him than I was with McCain four years ago. I remember Governor Romney and thought he stunk in office. When it comes to principled posi- tions, he has been pro- choice in the past and now says he's pro-life. I think like someone recently stated, he was actually just multiple choice. Wait for tomorrow, he may change again. I still can't vote for Obama because he simply has no idea what to do except make good speeches, but only if the teleprompter is on. As far as Joe Biden is concerned, the legacy of Spiro Agnew is looking better. There must be some- thing in the waters down in Delaware and Maryland. I will be glad when all these negative ads leave my TV set. Both sides are hor- rible at it. Obama seemed to be blaming Romney for a woman getting cancer which is about as low as it can go. Some of Romney's ads are just as bad. The ads from Brown and Warren are a little better but all this nega- tivity is one factor in why so few people vote with or with- out a voter ID card. I do have to say Democrats do produce the worse and most despi- cable negative campaign ads. Here in Massachusetts, the message from Demo- crats is vote for Warren, she's a Democrat. Not ex- actly the best reason to vote for anyone. Right now her campaign is nervous. It seems many Democrats who like Obama are voting for Brown for US Senate. These folks know that Brown has been a good moderate voice in the U.S. Senate for Massachusetts. He is not a right wing nut as many liberal Democrats make him into. If Jack Kennedy were alive today, he would be a Brown Demo- crat. If Kennedy were run- ning for president today, the Democrats wouldn't even nominate him. Massachusetts needs more diverse voices on Capitol Hill which is why I am also pushing Richard Tisei over U.S. Rep. John Tierney up on the North Shore. I am not a Tea Party anything. I sup- port many of this group's principles but not every- thing. Their voice is needed in the national discussion of where America is headed. I hope people vote because that is our role in a repre- sentative democracy. We are the government and it will be as good or bad as we allow it to be. Either we run it or it runs us. Vote as if your life depended on it because it really does in many various ways.