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Spring Cleaning for Plan Sponsors


Did you know Department of Labor investigations consistently find failures in over 70% of retirement plan audits? These findings could be anything from failing to monitor the plan to defects in plan administration to misinterpreting plan provisions. Since spring is now officially upon us, consider a few suggestions for cleaning up your retirement plan.

Review your plan documents

First of all, it’s pretty helpful to know where they are – an auditor would certainly want to. Plan documents include the adoption agreement, amendments, summary plan description, investment policy statement, and so on. If you don’t have a fiduciary file or secure online vault in which to store these documents, start one today. Request any missing documents from the appropriate parties. Next, verify your plan documents are compliant with laws and regulations; amend them as required. Most importantly, though, ensure you are adhering to them!

Know your roles

To be compliant, the people running your day-to-day operations need to understand both the plan documents and their fiduciary duties. Define roles and clarify responsibilities. Don’t forget to document these assignments, as well as the processes to implement them – it may be beneficial to utilize a committee charter, fiduciary acceptance and acknowledgement letters, or a retirement plan internal controls policy. It’s important to be aware of all the fiduciaries serving your plan, because you have potential liability for their actions. And even if you have delegated certain fiduciary duties to others, you still retain fiduciary responsibility for prudently monitoring their performance.

Monitor the contribution process

The most common ERISA violation is making delinquent contributions and loan repayments. No matter who is responsible for remitting contributions, you must know your plan’s reasonable standard and understand the overall remittance process. Take care to monitor the responsible parties so you are attuned to issues as they arise; if they do, work with an advisor to determine how you should correct late payments, as well as report delinquent payments on your Form 5500.

Schedule your audit

If you haven’t done so already, schedule your plan’s required audit. Take care as you select your auditor: an auditor plays an important role in the health of your plan, so be sure to ask clarifying questions regarding their capabilities, workload, credentials, etc. Exhibit due diligence by documenting your selection process.

Clear the clutter

You also have a fiduciary responsibility to monitor the assets held in your plan and prudently act on your participants’ behalf. This includes terminated participants with account balances in the plan. And that’s not all. Those terminated participants are also required to receive benefit statements and plan disclosures. Depending on your service agreements, you may be paying a per-participant fee to maintain these terminated account balances. Discuss with your advisor if it would be beneficial to initiate a force-out campaign – following the terms of your plan document, of course!

Look ahead

You have three quarters left to achieve the goals initially set for 2018. Preparing participants for retirement might be high on the list (we sure hope so!), but have you put plans in place to make it happen? Pull out your calendar and prioritize time for your employees – schedule enrollment and engagement meetings to increase their financial wellness. Equip them with the tools they need to succeed. Determine the metrics you’ll use to track their progress, then decide next steps based on that data.
Being a plan fiduciary is not a duty to take lightly - there are many administrative and compliance-related tasks to perform. But we do believe you should take pride in being a good steward of your company's retirement plan assets, because it means you are better equipping your employees for retirement. After all, the primary purpose of a retirement plan is to provide benefits for plan participants and beneficiaries. So roll up your sleeves and take time to polish your plan.

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