As a plan sponsor you have certain responsibilities that you must understand and follow to mitigate risk. This blog will review those responsibilities and offer tips to help assist compliance.
First, you should establish and follow a sound fiduciary process. You may want to establish a fiduciary committee to oversee the plan’s fees, service providers, decisions that are made and the plan’s investment options. Another part of this process is to establish processes and procedures that include periodic due diligence reviews and to ensure that the plan maintains its tax-qualified status.
Second, you should ensure you take advantage of 404(c) protection. Plan documents should reflect that you intend to comply with this protection by allowing participant direction of all investment options, by diversifying investment choices and then monitoring these options. In line with this other disclosures and information should be provided to participants.
Third, plan participants should be made aware of the plan’s provisions, investment information, investment options and assistance with retirement planning. This is accomplished through employee education that provides essential information to eligible employees and even non-participating employees that provide specific steps to achieving the retirement that they desire. A summary plan description should be made available to all participants which discloses 404(c) intent and additional plan documentation. You should ensure that the written plan document complies with the ERISA rules and regulations that govern retirement plans and establish procedures to update and follow the plan’s provisions.
Fourth, ensure that you satisfy all reporting and disclosure requirements. ERISA has reporting requirements that must be followed including the disclosure of required information to participants and beneficiaries.
Finally, you should continually update your fiduciary and retirement plan knowledge by taking advantage of education sources that are available. Your plan sponsor should offer information and education on investment, current regulatory, and fiduciary topics.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Ray Amelio is Managing Director and Chief Marketing Officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Ray can also be reached for comment at 412-227-3200.