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Seven Fiduciary Traps to Avoid: #6 - No Understanding of the 401K Plan Security Protocol

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Among the various fiduciary traps for Plan Administrators and others with fiduciary responsibilities, concern over security is critical.  Along with addressing the contents of the portfolio, it is essential to understand and address the safety of the portfolio.

The one question that faces everyone with a fiduciary oversight responsibility is: “How safe is your 401k Plan?”

With innovative and constantly evolving cybercrime and traditional fraud activities and scams occupying a prevalent position in today’s news headlines, this is a tough question to answer. Understanding what safeguards one should put in place, and how to implement them, is a good place to start. With hackers turning their attention to attacking banks and other financial institutions, there are no guarantees of security.   Consequently the probability of retirement accounts being the next big target is serious. Ben Johnson, a chief security strategist at Bit9 + Carbon Black, a security company in Waltham, Massachusetts, said, “Retirement accounts are squarely in the cross hairs of cyber attackers”.  The warning from Johnson continued when he noted; “Once cyber criminals have access to the account, it can be emptied in a matter of minutes, but the victim may not realize it until they do their annual review of their retirement accounts much later.”

So what can be done? Knowing that your 401k Plan is susceptible to attack and that there can be no promises to keep your funds safe, every Plan Administrator must be sure that proper protocols are in place. To protect the Plan it is important that participants receive education and information regarding the security risks.   In addition participants need both tools and suggestions to minimize the problem.  This can include making it hard for the hackers.  They can accomplish this by conducting a risk analysis of the existing security situation, executing strong and effective policies.  Not to mention having all users strengthen their own passwords.