401(k) Admin Advantage

W h o l e s a l e r Tr a i n i n g

J u n e 2 , 2 0 1 4

Agenda

• Introduction– Pat Bello

• 3(16) Overview / Fiduciary Role– Janis Winterhof

• Product and Pricing Overview / FAQs– Tim Bormann– Rachel Peterson

• Sales Positioning– Diane Kolvek

• Marketing Materials / Communication Plan– Matt Ord

• Questions?

3(16) Overview/Fiduciary RolePresented By: Janis Winterhof

Overview

• ERISA’s Fiduciary Roles• 3(16), 3(21) and 3(38)• Fiduciary Duties and Liability• Legal Aspects of Delegating Plan

Administration

ERISA’s Fiduciary Roles

• Trustee• Investment Manager• Investment Advisor• Named Fiduciary• Plan Administrator• Delegated Fiduciary

ERISA’s Fiduciary RolesTrustee Investment

ManagerInvestment Advisor

Named Fiduciary

Plan Administrator

Delegated Fiduciary

Basis in ERISA

403 3(38) None 402(a) 3(16), 101-103 405(c)

Scope of Authority

Limited Limited Limited Full Limited Limited

ERISA Fiduciary Type

3(21) 3(38) 3(21) 3(21) 3(16) 3(21)

What is 3(16)?

A. The day before St. Patrick’s Day

B. The area code for Wichita, Kansas

C. John Corrieri’s personalized license plate

D. A section of ERISA relating to plan administration

What is 3(16)?

• Defines “administrator”• Includes:

– person designated by the plan, – plan sponsor, if the plan does not designate

the administrator, or– person designated by the DOL

• Places responsibility for ERISA’s reporting and disclosure requirements

What is 3(21)?

• Defines “fiduciary”• Includes someone who:

– has discretionary authority or control over plan management or control over plan assets,

– gives investment advice, or– has discretionary authority or control over

plan administration

What is 3(38)?

• Defines “investment manager”• Includes anyone who:

– has the power to manage, acquire or dispose of plan assets,

– is registered under law as an investment adviser or is a bank or insurance company, and

– acknowledges fiduciary status in writing

Fiduciary Duties

• Be loyal– Act solely for in the interests of providing benefits to participants

and beneficiaries– Defray the reasonable expenses of plan administration

• Take care: be a prudent expert– Carry out duties “with the care, skill, prudence and diligence

under the circumstance…that a prudent [person] acting in like capacity and familiar with such matters would use”

• Diversify investments• Exercise obedience

– Follow the plan documents

Fiduciary Liability• Personal liability• DOL penalties

– “EBSA Achieves Over $1.6 Billion in Total Monetary Results in Fiscal Year 2013”*

– FY13 EBSA closed 3,677 civil investigations with 2,677 (72.8%) resulting in monetary results or corrective action*

• IRS penalties**– Top ten failure #4: not satisfying loan provisions– Top ten failure #5: impermissible in-service distributions– Top ten failure #6: missing RMDs

*www.dol.gov/ebsa.newsroom.fsfyagencyresults.html

**www.irs.gov/retirement-plans/top-ten-failures-found-in-voluntary-correction-program

Delegation=Fiduciary Protection

• Limited Fiduciary Exposure– Delegated fiduciary retains all legal responsibility for

administrative role– Plan sponsor’s sole fiduciary role for delegated duties

is hiring and monitoring the delegated fiduciary

• Limited ≠ Eliminated– Delegation creates co-fiduciary relationship– Plan sponsor cannot avoid fiduciary role

401(k) Admin Advantage Overview and FAQ’sPresented By: Tim Bormann & Rachel Peterson

Product Overview

Participant Notice Distribution Services (Level 1)

– Participant Statements– Participant Fee Disclosures– Blackout Notices– Safe Harbor Notice– ACA, QACA, EACA Notices– Summary Plan Description– Summary Annual Report– QDIA Notice– Missing Participant Services

Product Overview

Transaction Processing Services (Level 2)

− RMD Notices and Payouts− Termination Packet Delivery− Involuntary Force-outs− Separation of Service Distributions− Loan Distributions and Monitoring− Hardship Distributions and Monitoring− In-Service Distribution Requests − Management of Unclaimed checks

Product Overview

• Full Service options– Level 1 – Notice Distribution– Level 2 – Transaction Processing– Both Level 1 and Level 2

• TPA options– Level 1 Only

• Additional Services– Qualified Domestic Relations Orders (QDRO) Review– Enrollment Book Delivery to Participant Homes

Client Pricing Strategy

• Fully Electronic – 85% or greater of participants have electronic

delivery– Reduced Cost

• Partially Electronic/ Paper– Less than 85% of participants have electronic

delivery– Higher Cost

3(16) Fee Schedule - Billed

Services Provided Base Fee

Per Participant Fee

(Fully Electronic Delivery)

Per Participant Fee

(Partial Electronic Delivery)

Notice Distribution $500 $3.00 $8.00

Transaction Processing

$600 $1.00 $4.00

Both $1,100 $4.00 $12.00

Participants are defined as Eligible Participants plus former employees with balances.

Requirement for electronic delivery rates: A minimum of 85% of participants must receive information electronically and email addresses must be provided.

3(16) Fee Schedule - Wrapped

Plan Size NoticeDelivery

Transaction Processing

Both

Less than $500,000 Billed Billed Billed

$500,000 - $1M 10 bps 5 bps 15 bps

$1M - $2M 5 bps 5 bps 10 bps

Over $2M Custom Custom Custom

Rates shown above are for electronic delivery. If partial electronic delivery is required, the costs shown above will increase by 5 bps. If both services are selected, the total cost will increase by 5 bps rather than 10 bps.

Custom pricing requires a minimum increase of 5 bps.

Additional Services

• QDRO Fees - $500.00 for review and approval services– Charged to Participant account

• Enrollment Books mailed to participant homes will be charged an additional $1.00 per book.– Billed to Sponsor unless over $2M in assets then can be

wrapped

We offer these services for additional fees. They will be billed as indicated below:

FAQ – What else should I know?

What is available as of 7/1/14:– Proposal will include Product Materials and Fully

Electronic Pricing– New RSA Addendum (Recordkeeping Service

Agreement)– Co-Fiduciary Coverage

FAQ – What else should I know?

What is not available:– Plans with outside assets– 457 plans and I(k) plans– Notices are only available in English– Transaction Services (Level 2) for TPA plans– No A’La Carte pricing– Not currently available to Existing clients– EPIC clients – service is not offered

FAQ – Setting ExpectationsRequirements upon signing up for service:

– Participant Email addresses– Payroll Information– Plan Documents/Loan Policy– Force-out Agreement with Frontier Trust– Vesting Validation– TPA clients – Amendments, Eligibility and Notices

are critical

Sales PositioningPresented By: Diane Kolvek

Consultative Solutions

• Limited competition• New conversations with advisors• Allows for strengthened TPA relationships• Two tiers of service for unique needs and

flexibility• Extremely affordable solution

Advisor Value Positioning

• Give a compelling reason to move a plan• Offers differentiator for new prospects• Advisor can focus on growing practice

Plan Sponsor Value Positioning

• Simplicity – takes function off plate• Peace of mind – solve regulatory

compliance worries• Ease of doing business – one source• Cost savings – outsourcing vs employee

TPA Value Positioning

• Creates partnership recognizing mutual strengths

• Addresses TPA limitations to offer 3(16) due to cost of liability insurance

• Positions TPAs to do what they do best

See how happy this advisor is?I love my

Mutual of Omaha

wholesaler!!!

401(k) Admin Advantage Campaign MessagingPresented By: Matt Ord

Overall Campaign Message

“401(k) Admin Advantage brings Simplicity, Ease of Doing Business and Peace of Mind to Plan Sponsors by taking on the burdens of day-to-day plan administration and minimizing plan risk while enhancing Advisor and TPA relationships.”

Plan Sponsor Messaging

“Mutual of Omaha will act as a co-fiduciary with plan sponsors by taking on the burden of certain day-to-day administrative duties, making it easier for them to focus on building their business”

TPA Messaging

“Mutual of Omaha will work with TPAs to offer complementary services that fill in the gaps in the TPA offering, so that together we can provide the best possible retirement solution for the customer. Mutual can provide notice distributions while TPAs provide transaction services, creating a complete service offering for plan sponsors”

Marketing Materials

Marketing Materials (continued)

Marketing Campaign Timeline

• 6/4: TPA Announcement • 6/12 : Advisor Teaser Email: http://mooitg.mutualofomaha.com/esp/e2328 /• 6/12: Public Relations Outreach (exclusive meeting with 401(K) Wire)• 6/13: Sellretirementright.com promotional content goes live• 6/16: Press release disseminated to all 401(k) trade publications • 6/16: 401(k) Admin Advantage Ad published in NAPA Net Magazine’s

Summer Issue

• Tier One Advisor Mailing (top 25):– 6/12- Wooden In-box mailing First Flight– 6/16- Wooden In-box Mailing Second Flight

• Tier Two Advisor Mailing (following 50):– 6/23-Envelope Mailing First Flight– 6/30- Envelope Mailing Second Flight

Marketing Resources

• The Internal Navigator Blog:

http://blogs.mutualofomaha.com/rms/message-playbooks/401k-admin-advantage-playbook/

• RP Marketing: RP_Marketing@mutualofomaha.com

Questions

For more information contact your Regional Sales Director