We have all heard the phrase, “Too many Chiefs and not enough Indians.” And often you were told that you own your 401k plan. The regulators tell you so for the reason is that it is called a self-directed plan, meaning you can freely make your own investment choices. Unfortunately, that is no longer true! You no longer have a certified financial adviser recommending investments. At one time, legitimate financial advisers were called “fiduciaries” and they were registered with the Securities and Exchange Commission. They were legally held to serve your “best interest,” and if they failed in their duties, and you could prove that as fact, a court of law would award you damages, clear and simple.

In 2023, you will be living in a different world. Actually, the world has changed dramatically in the past decade, but in the coming months you will identify with a new world, and it will not be a “Brave New World.”

In the year 2023, there will be a huge push for Plan Sponsors of smaller 401k plans to subscribe to what the Department of Labor calls a Multiple Employer Plan (MEP). The IRS defines an MEP as follows… A multiple employer plan is a plan maintained by two or more employers who are not related. The IRS link provides the legal resources required, and other internet links will fully explain it’s concept. Insurance companies like Principal will push hard in the coming months to get various associations on board to buy into their plans… all I can say is “buyer beware!” At issue is the fact that the MEP’s will require more participation by outside resources to manage your money.

As if you didn’t already know this as fact, all the money that is deposited into your now near defunct 401k savings plan is your money! Every penny of it! But you do not place those funds in an envelope every month and take it to your bank… your employer deducts the money from your paycheck, and combined with other contributors in your place of employment, it is mailed to a “Recordkeeper,” like the Principal Life insurance Company, for example.

The Recordkeeper is basically the link between you and your money. They control your money, manage the account by telling you what your account value is every month, they present the 401k documents to your employer, as well as any amendments filed that will change the terms of your agreement with your employer. The Recordkeeper provides a Website for you to log into, and will typically provide investment information such as your plan allotment. With all that they do, the Recordkeeper is not considered a Fiduciary in the legal sense of the word… but if you have an insurance company as a Recordkeeper, you can kiss your retirement savings goodbye! Principal Financial Services, Inc., describes the Recordkeeper’s responsibilities as follows:

Recordkeeper and participant services

• Delivers comprehensive recordkeeping services
• Helps build confidence through award-winning participant services²
• Provides individualized web experience with a plan health index to help assess the plan for each adopting employer
• Holds program assets for the benefit of the plan so you don’t have to

Next on the list of requirements to comply with the Department Of Labor (DOL) is a “Plan Administrator and 3(16) fiduciary. Principal defines the following responsibilities assigned as follows:

Plan administration and 3(16) fiduciary

• Day-to-day contact
• Interprets and enforces plan document
• Helps ensure IRS and Department of Labor compliance
• Completes and signs Form 5500

Finally, you will need an Independent Investment fiduciary as follows:

Independent 3(38) investment fiduciary

• Selects and monitors the plan’s investment lineup
• Recommends changes to the investment lineup when they deem appropriate

This should round out the needs required by the Regulators to allow your employer to turn the responsibilities of operating your 401k plan under the MEP program.

Now that we know the basic requirements, let’s look at “fees.” Each of the above responsibilities require a separate investment related entity to function as a group. We already know that principal will be the Recordkeeper, and according to this ad, Principal will hire National Benefit Services (NBS) as the Plan Administrator and 3(16) fiduciary. Finally, HUB will be the Independent 3(38) investment fiduciary.

This Plan by Principal is promoted by Principal to “help make life simpler for you…” I think “you” means your employer. Remember, “you” in the context of this lengthy essay means you, the employee!

By now, you should be receiving the message…. is this really a good plan for you? When I ask, “Who owns your 401k,” I am really asking, “who is paying for the benefit of owning a 401k plan.” Sadly, what you have interpreted in this post has been happening for decades. Companies like Principal and others have been ravaging 401k savings plans for years, perhaps none so corrupt as Principal, but most others have as well. The only guarantee you will have if you buy into Principal’s ideas is the fact you will lose your retirement to a very corrupt organization. We are all just now learning this as fact as it concerned the Wells Fargo companies. Wells Fargo and Principal are obviously sharing the same bed… just review many of my other posts… Drugs have been involved, and even a managing director for Principal, that managed one of their largest accounts, valued in the billions of dollars, kidnapped an Hispanic at gunpoint for drugs!

As unbelievable as it gets, Principal will never be prosecuted for their crimes! They know this as fact, and have no reason to stop their misdeeds! Your money is paying for these services, and Principal is pulling a huge 20% off the top of your retirement to manage it. This fact is true regardless of the plan you have with Principal, so enjoy the dream of a secure retirement now, because that is all it is… a dream!