Top 10 Do’s and Don’ts for DC Plan Sponsors

Maybe we are missing David Letterman’s top 10 lists which may account for two recent top 10 lists for DC plan sponsors like 401ks. One list details what DC plan sponsors should be doing and the other details the top 10 “killer” flaws – both worth reading.

Wells Fargo listed the top 10 actions a DC plan sponsor should take including:

1. Does the DC plan meet company goals and have the goals changed? Are goals aligned with what employees want?
2. Receive, review and understand provider fee disclosure for the plan. Providers are required to send them under section 408b2. Are fees reasonable? How do you know?
3. Receive, review and understand provider fee disclosure for participants under section 404c5. Are fees reasonable? How do you know?
4. Review plan procedures – who, what, when, how and why.
5. Review plan documents.
6. Have required communications to employees been sent?
7. Have other communications intended to improve outcomes been customized?
8. Does everyone who is a fiduciary know they are and have they received proper training? Do you know which of your vendors are co-fiduciaries?
9. Compliance review with legal counsel and providers, especially your TPA.
10. Have you kept up with and implemented changes in the law?

So now on to top 10 killer flaws in a plan offered by InvestmentNews:

1. Allowing employees to take out multiple loans
2. Over exposure to sector funds like energy stocks
3. New features like auto enrollment and auto escalation available to new employees only
4. No auto enrollment
5. Voluntary auto escalation
6. Too many funds in the investment lineup
7. No stretch match
8. Auto enrollment is immediate upon hire – may inhibit higher deferral rates from those that want to take action and a hassle for high turnover companies
9. No auto escalation
10. Low deferral rates for auto enrollment

Both lists are good – even if they are not as funny as Letterman’s.