DuPont + T. Rowe Price:
Essential Elements. PURE CHEMISTRY.
Plan Analysis and Overview
T. Rowe Price Tools and Best Practice
Considerations for Your Retirement Plan
Providing Ways to Move Your Plan Forward
T. Rowe Price is committed to providing you with resources to help you
with your strategic and fiduciary oversight as you move your plan forward.
These resources can help you:
>>
>>
>>
>>
>>
>>
Review, analyze, and consider implementing best practices for your plan
Understand the costs incurred and the value received
Evaluate participant behavior, trends, and asset allocations
Review your fiduciary risk exposure
Stay in alignment with your retirement plan goals
Drive participant success
Your Diagnostic and Strategic Planning Tools
These innovative resources can help you manage plan risk and bolster your
ability to be a champion for the overall health of your plan:
Strategic Plan Review
Plan & Investment Review
Plan MeterTM
Plan Cost Analysis & Report Card
Fiduciary Source
We invite you to explore how we use these tools to help you provide your
participants with the best possible retirement outcomes.
The following tools are examples of the type of reporting clients receive.
Data shown are for illustrative purposes only.
Strategic plan review
The Strategic Plan Review is a customized analysis of your current plan
against the latest industry trends. It presents solutions from our
service offerings that you may want to consider for your plan. The goal
of this annual review is to continually move your plan forward.
Elements of the Strategic Plan Review include:
>>
>>
>>
Strategic Solutions for 2009
2009 | Strategic Plan
Plan design – the fundamental architecture of your plan
Your plan’s current investment offerings and some you may
consider adding in the future
Service offerings such as compliance testing, enrollment,
loans, transaction processing, and data transfers
Strategic Solutions for 2009
at t. rowe price, our goal is to help sponsors construct the best possible retirement
program.
To meet this objective, we are highlighting important areas to consider in the coming year—along with suggested
solutions that are designed to make the best use of innovative technology and resources. Optimizing the plan
For more information about the services available
to sponsors
and
participants,
please contact
your T. Rowe
Price representative.
with best
practices
brings
improvement
on many
levels:
design
invest
Target-date investments promote diversified asset allocation, which can reduce risk. However, diversification
cannot assure a profit or protect against loss in a declining market. Here, we offer other ideas to help participants
invest with greater success to meet their retirement income goals.
service
Updating a plan with electronic services can improve the accuracy and timeliness of participant data. Learn
about the services and practices available today to further streamline administrative processes.
>> Participant education, communication, and third-party
educate
Personalized communications can grab participants’ attention by delivering targeted statements and messaging
that can help them make wiser saving and investing decisions. This section outlines educational tools that can be
used to increase participant outcomes in 2009.
measure
advice options
>>
Sponsor tools
1
With the use of automated services, for example, we can make the process of retirement saving easier and more
effective. This area covers plan design changes that encourage improved participation and savings behaviors.
Sponsors need an array of products and services that can further assist them in examining their plans. For
example, Plan MeterSM and other tools can help more accurately assess participants’ retirement readiness.
Of course, having serviced thousands of clients over the years, we’ve learned that an important aspect of applying
best practices is keeping in mind that one size does not fit all. We understand that just like participants, each
plan sponsor is unique—with an individual business culture and outlook for the company’s benefits program.
Our goal is to find solutions that work for sponsors while improving our ability to effectively meet the needs of
participants.
Strategic Solutions for 2009
If we can provide additional information or be of further assistance, please contact your T. Rowe Price
representative.
design
Call 1-800-638-7890
to request
a prospectus,
which includes
investment
To build a successful plan, sponsors need
to continually examine
the plan’s
current design
and consider
optionsobjectives, risks, fees, expenses, and
other
information
thatsolutions—and
you should read
and consider
carefully
for enhancement. By taking advantage
of the
latest proven
revisiting
standard
featuresbefore
to investing.
better address key participant behaviors—plan sponsors can build the framework for a comprehensive and
competitive plan that keeps pace in today’s business environment.
For more information about the services available to sponsors and participants, please contact your T. Rowe Price representative.
1
Pl an Opportunities Discovered:
T. Rowe Price will work with you to:
• Utilize participant e-mail addresses to streamline communications
and create personalized messaging strategies to increase savings.
1. Increase enrollment and employee contribution rates
Research shows that it’s the amount of money a participant saves that has the biggest impact on retirement readiness. As a rule of thumb, financial experts recommend a 15% to 20% total contribution rate, which includes
employer contributions. To reach that level—thus moving employees toward a more secure retirement—plan
design should encourage them to begin saving immediately and to increase their contributions on a regular
basis. Automated services, such as automatic enrollment and automatic increase, take advantage of inertia and
keep participants on track for their retirement goals. Sponsors may also consider structuring appropriate plan
defaults, such as enrolling new participants at a 6% rate, as well as some of the options provided below to further
optimize participant savings.
adoption
t. rowe price best practice considerations
yes
no
enrollment
Enable employees to enter the plan as soon as possible by allowing immediate
eligibility.
Automatically enroll all new and previously eligible participants.
Implement automatic enrollment service with a 6% salary deferral rate, 30-day grace
period, and a qualified default investment alternative (QDIA).
Reenroll eligible nonparticipants annually.
employee contributions
Implement a one-time deferral boost up to a target percentage, such as the company
match threshold.
Automatically increase salary deferrals by 2% annually, up to 20%.*
• Determine how encrypted e-mail can enhance security of your
day-to-day contacts.
• Consider automatically restarting deferrals for participants
who have taken a hardship distribution.
• Evaluate current plan design and administrative procedures to identify
opportunities for improvements.
looking forward:
Looking ahead, there are several options you can leverage to
improve participant outcomes:
• Consider adding Roth contributions to enable participants to
increase their spendable retirement income.
• Leverage Auto-Boost and Automatic re-enrollment services to
increase participation and participant savings rate.
• Consider increasing the automatic enrollment default deferral
rate to 6% with an automatic increase up to 20%.
• Customize your communication strategy to target specific
participants needs through personalized statements, webinars,
mobile and electronic interactions.
This is an example of the type of reporting clients receive.
Implement automatic increase service as an “opt-out” rather than an “opt-in” feature.
Allow other contribution types, such as age 50 catch-up contributions, rollovers into
the plan, after-tax, and Roth contributions.
Let participants save more through the plan by increasing the maximum pretax
deferral limit to 60% to 80%.
*A plan sponsor who wants to qualify for safe harbor status cannot auto-enroll participants at a deferral rate in excess of 10% of compensation.
For more information about the services available to sponsors and participants, please contact your T. Rowe Price representative.
2
Plan & Investment Review
With the Plan & Investment Review, you will know at a glance how
your participants are contributing and investing, as well as how your
plan compares with other plans. This powerful tool helps you:
>> Identify plan trends to understand how your participants
are saving
>> Stay informed on legislative and product updates
>> Analyze your plan trends against Profit Sharing/401(k) Council
of America data and T. Rowe Price clients
>> See how your investment options compare against the Lipper
peer group averages
Plan & Investment Review includes:
>> Cash flow
>> Participation and contribution rates
>> Asset allocation by age and status
>> One-fund contributors and investors
>> Net exchanges and exchange detail
>> Loan and rollover trends
>> Call center and online statistics
Pl an Opportunities Discovered
During the recent downturn of the market, here’s what we
discovered about our Plan Participants:
• Call volumes during the period were 40% higher than normal;
most participants were simply seeking assurance and asking
us what to do. Our representatives continued to reassure
participants and stress the importance of focusing on their
long-term retirement goals.
• Over 98% of our retirement plan participants took no action,
with exchanges between investments representing less than
1% of total T. Rowe Price Retirement Plan Services assets.
Trends show these assets primarily flowing from equity
products into stable value and fixed income investments.
Identification of these trends led to the creation of a customized
communication strategy for participants, including Web seminars
for plan sponsors and participants and a new section on your Web
site for important market updates and videos.
LOOKING FORWARD
• With approximately 56% of plan assets invested in the Stable
Value Fund, we may want to focus communications on
appropriate asset allocations and the benefits of diversification
to participants.
• Customize communications for the 40% of the plan
population that are terminated and retired.
• Develop communications strategies to help attract and retain
talent.
This is an example of the type of reporting clients receive.
Plan Meter tm
Plan Meter gives you a glimpse of your participants’ replacement
income projections. This resource not only looks at how much your
participants are investing but also at the way they are investing.
It also shows the potential impact of changes you can consider to
improve your results.
plan meter
SM
A RETIREMENT INCOME ANALYSIS FOR YOUR PLAN
Prepared exclusively for:
ABC Company
Plans:
12345 & 98765
2009
EXECUTIVE SUMMARY: DEFINED CONTRIBUTION PLAN(S)
R e p l a c e m e n t I n c o m e A n a lys i s
REPLACEMENT
INCOME: 23%
REPLACEMENT INCOME
TARGET: 50%
122
120
114
23%
108
21%
89
total employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
96
18%
84
STAT I ST I C S
108
101
96
NUMBER OF EMPLOYEES
120
25%
total non-participants . . . . . . . . . . . . . . . . . . . . . . . 57
median salary . . . . . . . . . . . . . . . . . . . . . . $64,055.00
84
72
72
60
60
48
median age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
median employee contribution – all . . . . . . . . . . 5%
median employee contribution – participants 5%
median total contribution – all . . . . . . . . . . . . . . 9%
48
34
36
median total contribution – participants . . . . 9%
36
median savings as multiple of salary . . . . . . . 0.32
7%
20
24
24
4%
12
0
0%
8
median RI participants . . . . . . . . . . . . . . . . . . . . 25%
median RI non-participants . . . . . . . . . . . . . . . . . 0%
12
2
2%
2
0
Each Plan Meter report is custom-generated for your plan and is
based on your retirement program’s options and rules.
0
>0%− 10%− 20%− 30%− 40%− 50%− 60%− 70%− 80%− 90%− >=100%
<10% 19% 29% 39% 49% 59% 69% 79% 89% 99%
Non-participants are defined as total employee
contribution = 0%
REPLACEMENT INCOME RANGES AS % OF CURRENT SALARY
This is an example of the type of reporting clients receive.
SOLUTIONS
T. Rowe Price offers a suite of solutions to address
challenges and increase projected replacement income.
R EPLACEMENT I NCOME A NALYSIS
Illustrates distribution of replacement ratios across the employee
population. These data highlight the amount of income employees
can expect to receive in retirement based on their current plan assets.
Plan Meter gathers employee data, including
participation, salary deferral, loan usage, and catch-up
contributions. The benefit of Plan Meter is that it
also considers plan specifics, like your matching formula.
RI
Replacement income —A percentage measurement
of the participant’s projected income relative to
current salary.
Projected Retirement Income/Current Salary = RI
Ex. $50,000/$100,000 = 50%
Years in Retirement = 95 – Assumed Retirement Age.
Pl an Opportunities Discovered:
Here’s what Plan Meter identified for the Danisco US 401(k)
Savings Plan to help participants reach their retirement goals:
7 | T. R O W E P R I C E
• The median replacement income for the Danisco plan is 25%.
• The median employee contribution rate is 7%. With an average
company match of 5%, the average participant savings
rate is 13%. T. Rowe Price suggests targeting a 20% average
participant savings rate.
• For participants under the age of 35, the median replacement
income is 37%.
EXECUTIVE SUMMARY: DEFINED CONTRIBUTION PLAN(S)
Current and Projected Income Scenarios
20
35
20
35
MEDIAN
MEDIAN
CURRENT RI
PROJECTED
PROJECTED
RI:AAS
RI:AAS + TARGET
+ CATCHUP
35
56%
50
46%
MEDIAN
50
50
50
24%
5
5
5
PROJECTED OUTLOOK
20
35
23%
5
CURRENT
20
MEDIAN
PROJECTED
RI:AAS + TARGET
+ CATCHUP
+ DELAY
R EPLACEMENT I NCOME P ROJECTIONS
These charts compare the current projected income level of your defined
contribution plan(s) with your projected outlook after adopting certain
suggested behaviors. The percentages expressed in these charts are aggregates
of employees’ projected replacement income as a percentage of their current
salaries. Based on such aggregated information and certain identified
assumptions, these data highlight the amount of income your employees can
expect to receive in retirement from their assets in your defined contribution
plan(s). They also compare current projected income levels with your target
replacement income.
Please note that the Aggregate Summary at the end of this report contains an
expanded replacement income analysis, which can take into account estimated
Social Security benefits and projected income from any applicable defined
benefit plan(s).
I DENTIFYING O PPORTUNITIES
In the following pages, the overall effectiveness of your defined contribution
plan(s) is (are) analyzed within key populations. Your retirement program’s
potential for change is then shown by projecting each population’s adoption of
different saving behaviors.
ACHIEVING Y OUR P ROGRAM ’ S P OTENTIAL
The keys to success for any retirement program are always to save more (we
suggest saving 15% of pretax salary), to use an appropriate asset allocation
strategy, to invest more conservatively over time, and to delay drawing on
savings for as long as possible. The goal is to get the maximum possible amount
of money working for the longest possible time.
T. Rowe Price offers many solutions that can reinforce these important messages
and help drive employee behavior.
RI: CURRENT
Replacement income percentage as
calculated using each employee’s current
asset allocation and contribution rate.
RI: AAS
Replacement income percentage
calculated assuming an age appropriate
hypothetical asset allocation strategy for
each employee and using current
contribution rates. This metric shows
potential impact of changed
asset allocation.
R I : A A S + TA R G E T CO N T R I B U T I O N
R AT E + C ATC H - U P
Replacement income percentage
calculated assuming each employee
invests in an age appropriate
hypothetical asset allocation strategy,
contributes at the targeted rates and
makes additional catch-up contributions,
where applicable. This metric shows
potential impact of changed asset
allocation, increased contribution rate,
and catch-up contributions.
R I : A A S + TA R G E T CO N T R I B U T I O N
R AT E + C ATC H - U P + D E L AY E D
RETIREMENT
Replacement income percentage
calculated assuming each employee
invests in an age-appropriate
hypothetical asset allocation strategy,
contributes at the targeted rates, takes
advantage of the catch-up contributions,
if applicable, and delays retirement
for three years. This metric shows
potential impact of improved asset
allocation, increased contribution rate,
and delayed retirement.
looking forward:
Savings rates are critical toward generating sufficient replacement
income. The most dramatic improvements across the board result from
increasing savings rates. Both auto-increase and auto-enrollment would
be effective solutions to improve replacement income.
T. R O W E P R I C E | 6
• By adding auto-increase up to 12%, you can potentially improve
participants’ replacement income by an average of 50% and help
your plan reach an average 20% savings rate.
• An opportunity exists to improve the overall replacement
income for the plan by utilizing the automatic enrollment and
auto increase for the eligible non-participating populations. By
auto enrolling this population, the median replacement income
for the eligible non-participating increases from 9% to 23%.
Source: Plan Meter™ for
ABC Company – Fall 2008 .
Plan Meter services are offered
by T. Rowe Price Associates, Inc.,
a registered investment advisor.
Monte Carlo Simul ation
Material assumptions
The investment results shown in the various PlanMeter charts were developed with Monte Carlo modeling using the following
material assumptions, as well as those outlined in the PlanMeter Report Appendix. The underlying long-term expected annual
return assumptions for the asset classes indicated in the charts are not historical returns. Rather, these are based on our best
estimates for future long-term periods. Our annual return assumptions take into consideration the impact of reinvested dividends
and capital gains. We use these expected returns along with assumptions regarding the volatility for each asset class and the
intra-asset class correlations to generate a set of simulated, random monthly returns for each asset class over the specified
period of time. These monthly returns are then used to generate 1,000 simulated market scenarios. These scenarios represent a
spectrum of possible performance for the asset classes being modeled. The success rates are calculated based on these scenarios.
We take taxes and required minimum distributions (RMDs) into consideration, as described in the Appendix, but we assume
no early withdrawal penalties. Investment expenses in the form of an expense ratio are subtracted from the expected annual
return of each asset class. These expenses are intended to represent the average expenses for a typical actively managed, noload fund within the peer group for each asset class modeled. The analysis does include all of a participant’s assets in the defined
contribution plan(s), but categorizes them simply as individual stocks, diversified stock funds, bonds, and short-term investments.
Other asset classes not considered or modeled may have characteristics similar or superior to those being analyzed.
IMPORTANT: The PlanMeter projections or other information generated by a T. Rowe Price investment analysis tool regarding
the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are
not guarantees of future results. The simulations are based on a number of assumptions. There can be no assurance that the
projected or simulated results will be achieved or sustained. The charts present only a range of possible outcomes. Results may
vary with each use and over time, and such results may be better or worse than the simulated scenarios. Clients should be aware
that the potential for loss (or gain) may be greater than demonstrated in the simulations.
The replacement income (in current dollars) is the percentage of the employee’s current annual salary withdrawn in the first
year of retirement; in each subsequent year, the amounts withdrawn are adjusted to reflect a particular annual rate of inflation.
The underlying long-term expected annual return assumptions (gross of fees) used in each of the Monte Carlo simulations are
10% for large-cap individual stocks; 11% for mid-/small-cap individual stocks; 10% for stock funds; 6.5% for intermediate term,
investment-grade bonds; and 4.75% for money market/stable value investments. The following expense ratios are then applied to
arrive at net of fee expected returns: 0% for individual stocks; 1.211% for stock funds; 0.726% for intermediate-term, investmentgrade bonds; and 0.648% for money market/stable value investments. The simulation success rate of each employee’s retirement
planning strategy is identified for a sponsor’s plans in the Rules and Assumptions section of the PlanMeter Report. Simulation
success is defined as having at least one dollar remaining in the portfolio at the end of retirement. (The retirement period in
the simulations is assumed to end at age 95.) The simulation success rate of a particular retirement strategy is determined by
counting the number of simulation scenarios that result in at least one dollar remaining, and dividing this figure by the total
number of simulation scenarios of that strategy used.
Limitations of the model
Material limitations of the investment model include:
>>
>>
Extreme market movements may occur more frequently than represented in our model.
>>
Market crises can cause asset classes to perform similarly over time, reducing the accuracy of the projected portfolio
volatility and returns. The model is based on the long-term behavior of the asset classes and therefore is less reliable for
short-term periods.
>>
The model assumes that there is no correlation between asset class returns from month to month. This means that the
model does not reflect the average periods of “bull” and “bear” markets, which can be longer than those modeled.
>>
Inflation is assumed
Some asset classes have relatively limited histories. While future results for all asset classes in the model may materially
differ from those assumed in our calculations, the future results for asset classes with limited histories may diverge to a
greater extent than the future results of asset classes with longer track records.
plan cost Analysis & report card
These two tools work synergistically to outline your plan’s fees and your
investment options.
Plan Cost Analysis
The Plan Cost Analysis enables you to easily view and compare the fees
your participants are paying against the Lipper expense ratio average.
This level of fee transparency helps you review the cost of your plan by
providing:
>>
Market value of your plan’s assets and a breakdown of each
investment’s percentage within your overall plan
>>
>>
>>
Investment expense ratios
Plan investment and administrative costs
Participant communications costs
Report Card
The Report Card is a one-page summary of investment performance
compared with relevant peer groups over multiyear periods. This tool
provides summary and detailed information including:
>>
>>
>>
Performance history over 1-, 3-, 5-, and 10-year periods
Lipper classification and ranking
Sharpe ratio and annual standard deviation relative to Lipper peer
group
Pl an Opportunities Discovered
and Addressed
Here are some opportunities to consider as a result of our initial
review and analysis of your plan and investments:
• Extend daily transaction and trading deadline from 3:00pm to
4:00pm Eastern Time
• Eliminate Self-Directed Brokerage annual account fee of $125.
• Potential reduction of commission for common stock trading.
• Possible reduction or elimination of dividend reinvestment fee
of 1.25% for dividends reinvested in DuPont stock.
• Potential reduction in loan initiation fee of $150.
• Possible reduction in annual IRA Rollover account holder fee of
$50 to $100, for automatic rollovers.
• Ongoing and proactive monitoring of fee arrangements.
This is an example of the type of reporting clients receive.
fiduciary source
T. Rowe Price Fiduciary Source is a library of practical tools
that provides checklists, reference materials, and best practice
considerations to help you understand the importance of your
fiduciary responsibilities.
Fiduciary Source | rps.troweprice.com/sponsor
Helping plan sponsors meet
their fiduciary duties
This valuable resource features:
>> A comprehensive look at fiduciary responsibilities and how to fulfill
Helping you to understand
and meet your responsibilities
them
Understanding Retirement Plan Costs
T. Rowe Price Retirement Plan Services, Inc., is committed to developing and enhancSeptember 2008
important responsibility for plan sponsors is to understand the costs incurred by their
The T. Rowe Price Advantage
T. Rowe Price works closely with
clients to expand and evolve
retirement plans and to make sure that these costs are reasonable and represent a
good value. Employee Retirement Income Security Act (ERISA) provides that a plan
reasonable in light of the level and quality of service received.
The purpose of this brochure is to help plan sponsors better understand the expenses
retirement plans by:
associated with the services available in their plans and to facilitate discussion of these
•
costs with interested third parties, including investment committees. Because services
•
•
•
•
•
•
Sharing best practices and
expertise in a climate of rapid
change.
Providing your employees with
the information necessary to
>>
Your plan’s recordkeeping documents, such as investment
report cards, plan cost analysis, communication plans, and
nondiscrimination testing results
>>
Regular updates on legislative requirements and industry
hot topics to keep you informed and help you keep your plan
in compliance
vary by plan, it is important to note that not all costs described in this brochure apply to
all plans. Therefore, T. Rowe Price recommends that you review this brochure to gain a
better understanding of plan costs and refer to your Plan Cost Analysis for detailed costs
for your particular plan.
security in retirement.
Anticipating and answering
the needs of sponsors and
participants.
Leveraging automated solutions and award-winning
communication tools to help
participants save for
retirement.
Providing experienced and
dedicated service teams to
help navigate and lead plan
changes.
Monitoring the economics of
our plan(s) through regular
revenue and cost analysis.
Maximizing technology to
meet sponsor and participant
needs.
Three Basic Cost Categories
T. Rowe Price strives to provide quality services at a reasonable cost to our clients. We have
participant communications, and proactive customer service.
In general, plan costs fall into three broad categories: plan investment expenses, plan
administrative expenses, and participant communications costs. In our current business
model, assets under T. Rowe Price management, average participant account balances,
and plan administrative requirements are key factors in determining an appropriate fee
structure.
Plan Investment Expenses
Plan investment expenses correlate with the management of plan investments. These
expenses are determined by each investment fund’s expense ratio and the market value
of the fund assets. In general, assets invested in T. Rowe Price proprietary mutual funds
generate revenue from the funds’ fees. This revenue helps cover the costs of investment
© T. Rowe Price Group, Inc.
All rights reserved.
o w e funds
P R i cand
e also helps to offset the cost of
management and operation of T.
theRmutual
plan administration, compliance services, and participant communication materials
that we provide. In many cases, non-T. Rowe Price funds provide an administrative fee
Client Update:
Receipt of Gifts and Entertainment
payment to T. Rowe PriceRegulatory
to help offset theUpdate
cost of providing these services as well.
Some non-T. Rowe Price funds do not provide this payment.
Continued on page 2
Fiduciary Source
In keeping with our commitment to helping you meet your fiduciary
responsibilities, we want to update you on guidance from the U.S.
Department of Labor (DOL) regarding the receipt by plan fiduciaries
of gifts and entertainment from third parties dealing with their plan.
Recent attention paid by the DOL on receipt of gifts and gratuities by
plan fiduciaries has raised concern that routine business and social
contacts could be seen to result in potential violations of ERISA’s
prohibition against a fiduciary receiving “consideration for his own
personal account from any party dealing with [a] plan in connection
with a transaction involving the assets of the plan.” ERISA § 406(b)
(3). Prior court decisions interpreting ERISA § 406(b)(3) suggest that
the provision was intended to prevent fairly egregious circumstances
in which a plan official receives something of significant value for
agreeing to direct plan business to a particular party. While merely
attending a free conference or other event sponsored by a service
provider was not generally considered to raise a claim under ERISA
§ 406(b)(3), it is important for plan fiduciaries to be aware of DOL
guidance describing the application of ERISA § 406(b)(3) and new
disclosure rules that require the reporting of gifts and entertainment.
What is r e qu i r e d i n th e 2009 P l a n Yea r?
In recognition of the benefits of offering certain services to the
plan such as provider-sponsored conferences that educate plan
sponsors about their duties and responsibilities to the plan, the
DOL has provided further clarification on ERISA § 406(b)(3)
in the context of receipt by plan fiduciaries of non-monetary
compensation of insubstantial value (such as gifts or meals)
associated with conferences, events, and business meetings
pertaining to the plan. The guidance is in the form of an addition
to DOL’s enforcement manual, which provides guidelines to be
used by its investigators in reviewing plans regulated by ERISA.
The new text is paragraph 12 of the Fiduciary Investigations
Program section of the manual.
rps.troweprice.com/sponsor
1
In determining whether a plan fiduciary’s acceptance of meals,
gifts, entertainment, or expenses associated with educational
conferences is a possible fiduciary violation, the manual instructs
the DOL investigator to examine:
• Whetherthefactssupportanallegationthatthereceipt
of gifts, gratuities, or other consideration were for the
fiduciary’s personal account and received in connection with
a transaction or transactions involving the assets of the plan
in violation of ERISA § 406(b)(3); and
• Whetherthefiduciaryortheplanmaintainedareasonable
written policy or plan provision governing the receipt of items
or services from parties dealing with the plan and whether the
fiduciary adhered to that policy. This suggests that, for ERISA
enforcement purposes, DOL finds acceptable written plan
policies akin to corporate ethics policies.
There is no further elaboration of the circumstances that would
meet all of the elements of and thus possibly violate § 406(b)(3).
The manual does provide, however, that for enforcement
purposes, investigators should generally not treat the following
as § 406(b)(3) violations:
• Thereceiptbyafiduciary(includinghisorherrelatives)
from any one individual or entity (including any employee,
affiliate, or other related party) of (a) gifts, gratuities, meals,
entertainment, or other consideration (other than cash
or cash equivalents); and (b) reimbursement of expenses
associated with educational conferences, provided that
the aggregate annual value of the items in (a) and (b) is
less than $250 and their receipt does not violate any plan
policy or provision. The receipt of such items is deemed
“insubstantial”; and
Highlights of the Latest PLAN Fiduciary Reviews:
• Present a comprehensive Fiduciary Source Kit, which includes
a Fiduciary Checklist, roles and responsibilities, and plan
document and contract review to members of your team who
are designated with fiduciary responsibility.
• Provide an inventory of contracts and documents, compliance
reporting results, procedural flow summaries, plan cost analysis
reviews, report cards of investment results, communication
plans, and employee meeting reports.
• Update you on Department of Labor rules and guidance.
• Sent a Fiduciary E-kit highlighting important topics to consider
during the year.
This is an example of the type of reporting clients receive.
Summary
Adding Value for You and Your Participants
As you can see, T. Rowe Price strives to add value for you and your
participants. The resources we provide to our clients are a culmination
of our long-term investment management expertise and understanding
of participant behavior. By continually combining our expertise with
your strategic business goals, together we can minimize risk and
promote the best possible retirement outcomes for your participants.
Your Relationship
Manager
Do Kim
Senior Relationship Manager
As your strategic partner, I’m
ready to help you leverage our
tools and consider our best
practices to help meet the
objectives of your retirement
plan and help your participants
move toward a more financially
secure retirement. I look
forward to working together in
the months and years to come.
If you have questions or need assistance, I’m ready to
work with you toward your goals.
This is an example of the type of reporting clients receive.
DUP_bro_prs_0911
110953
10/11