Twelve Questions for a Plan Fiduciary
With the 2014 year in its final stretch, now is a perfect opportunity to make sure plan fiduciaries are well-positioned for the new plan year. Whether you prepare for year-end reviews or set agenda for the next twelve months, consider exploring some of the key fiduciary practices using a Q&A approach offered below.
There is no right or wrong answer. Responses to these questions will allow you to conduct a quick plan health assessment, diagnose possible opportunities for improvement, and may become a blueprint for plan sponsor services in 2015:
• Are you able to identify all plan fiduciaries and their responsibilities?
• Is your plan document readily available, properly executed and up to date?
• Do you have a good understanding of terms and provisions which govern your plan?
• Who is responsible for timely identification and enrollment of new participants?
• Do you follow a consistent process to timely distribute all required participant notices and disclosures?
• Do you know the deadlines for timely deposit of salary deferrals, loan repayments, and employer contributions?
• Can you identify all service providers for your plan?
• Do you know specifically what services your providers are responsible for and what, if anything, you need to furnish to those providers to enable them to carry out their duties (have you paid attention to the small print)?
• Have you received the fee disclosure documents from all of your service providers and when was the last time you reviewed them?
• Do you know how your service providers get paid for the work performed for your plan and whether those fees are reasonable?
• Do you follow a documented approach to review plan investments and/or service providers who provide investment recommendations for your plan?
• Do you offer an education program to help your plan participants prepare for retirement? If these duties are outsourced, do you review the provider communications to your plan participants?
No doubt, you have noticed that these questions focus largely on internal controls. Internal controls create a roadmap for individuals charged with management of a retirement plan. They help fiduciaries carry out their duties in a way that can reasonably assure achievement of plan’s objectives as well as compliance with applicable laws and regulations.
The Department of Labor has historically emphasized that fiduciary prudence is demonstrated by the processes used by plan sponsors in managing their plans. For instance, while the Investment Policy Statement (IPS) is not required by ERISA, the DOL auditors have been known to inquire about this document to evidence prudent process. In a similar fashion, questions concerning existence and utilization of internal controls have been conspicuously present in recent IRS audits. The Service believes that existence of such controls is indicative of plan’s health; conversely, when plans lack formal internal controls they appear to be at a higher risk for non-compliance in operation and maintenance thus inviting further scrutiny.
How We Can Help
Retirement Services offers a wide array of fiduciary and plan services tools. Retirement Solutions Consultants are available to assist in implementation of internal controls and to conduct a self-audit to facilitate smooth operation of a retirement plan. Call us at (888) 926-0600 or click here to connect with a consultant.