From: Jeff Kostis [mailto:jeff@jkfinancialplanning.com] 

Sent: Thursday, March 10, 2011 11:46 AM 

To: EBSA, E-ORI - EBSA 

Subject: Public Hearing on Definition of Fiduciary

Dear Sir / Madam, 

I am writing in response to the proposed definition change to the word “Fiduciary” and 

how it will affect plan participants. 

I am a Certified Financial PlannerTM Professional and a CPA. My practice is focused on 

working with individual clients, the vast majority of whom are participants in 401(k) or 

403(b) retirement plans. I am NOT an attorney, nor am I an ERISA specialist. My 

comments and views are based on what I see in my financial planning practice dealing 

with plan participants and what I saw when I worked in the private sector dealing with 

Human Resource or Benefits departments. 

I find that plan participants assume that anyone connected to their retirement plan is 

working in their best and only interest. That party may be the plan sponsor, plan advisor, 

plan administrator or any other party to include the accountants that provide valuations 

on non-publically traded companies. Additionally, in my experience the plan sponsors 

(benefits managers, Human Resource VP’s, Finance VP’s, CFO’s, etc.) do not have the 

background or training to properly select appropriate investment options for plan 

participants. Instead, they rely on the plan advisor to provide them with a short list of 

funds to select from and the assurance from the plan advisor that the fund choices provide 

appropriate diversification options. For these reasons, plan participants need to have 

100% confidence that those in charge of their retirement plans are working in their best 

interest only. 

From a financial planning perspective, the only viable option to save enough for 

retirement in a tax efficient manner is to use a retirement plan available through an 

employer. This is due primarily to the low contribution limits available in IRA accounts 

and income limitations that prohibit an employee from making tax deductible 

contributions to both an IRA and an employer sponsored retirement plan. If a plan 

participant chooses not to use the employer sponsored plan but go outside and use a 

commercially available annuity or make non-deductible IRA contributions, the person 

loses the upfront income deferral at their marginal tax bracket, leaving less money to save 

for their retirement. 

Further, the number of employees covered by defined benefit pension plans continues to 

decline, meaning that individuals are more responsible than ever to make sure they are 

providing for their own retirement needs. Defined contribution plan participants have no 

input into plan design, selection of plan advisors, investment options available, selection 

of auditor or anything else that affects the plan. The plan participant must, therefore, be 

afforded all reasonable legal protections to ensure they are not being taken advantage of 

when using this critical employee benefit. The only effective way to do this is to have 
ALL parties related to retirement plans subject to the high standards of a true Fiduciary 

and that those fiduciaries face strict penalties if they violate that trust. 

The primary objection I have seen is that this requirement may raise the cost to the 

participants. If all parties are currently acting in the best interest of the participants, the 

only incremental costs would be providing better documentation and should be minimal. 

In the case of plans that offer investments in the employer, I argue that the retirement 

plan should require an annual, independent valuation of said entity. The cost of this 

should be paid by plan participants, no different than they way they pay the expenses 

related to the other investment options in their plan. 

Thank you for your time and consideration of the above comments. 

Jeff Kostis, CFP(R), CDFATM, CPA/PFS 

JK Financial Planning, Inc. 

Vernon Hills, IL