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Retirement Plan Committee Helps Manage Fiduciary Responsibility

Retirement Plan Committee Helps Manage Fiduciary Responsibility

Retirement plan committee meetings on a periodic basis will help fiduciaries to make prudent decisions.  The retirement plan committee should operate according to written rules which describe the processes the committee members should follow and then be prepared to execute.  Mike Bourne, Managing Partner of Atessa Benefits in San Diego, CA and Board Member of the National Institute of Pension Administrators (NIPA) spoke with Fred Barstein, Founder and CEO of 401kTV recently discussed the logic supporting to explore the use of a retirement plan committee.  In the absence of a retirement plan committee, the fiduciary functions will normally fall to the ownership of a sponsoring company.  Mike and Fred discuss the myriad of reasons that a company would choose to use a retirement plan committee to demonstrate prudence related to making fiduciary decisions.

Full Transcript Here

Fred Barstein with 401kTV for the NIPA monthly video. I am here with Mike Bourne, welcome Mike. Okay if we ask you a few questions?


Mike, along with his duties as a board member for NIPA he is a managing partner with Atessa Benefits in the San Diego area and he has almost 400 clients, a mix of 401k, 403b, with a heavy emphasis on defined benefit. And in his prior life was a plan sponsor.


So he knows what it’s like to be you. So today we want to talk about retirement committees. Why should an organization have a retirement committee?

Well, first of all, the law requires that every plan has a plan administrator and that plan administrator is responsible for interpreting the plan document, for making decisions about plan operations, and hiring the other service providers. And is a fiduciary to the plan, which means needs to act in the best interest of the plan.


So having a committee keeps one person from having to check themselves, am I acting in the best interest of the plan, it’s now a group of people thinking are we acting in the best interest of the plan.

So larger company generally, even mid-size, have it. But what about smaller companies? Should they have one?

They should. Smaller companies typically the business owner winds up being the de facto plan administrator or retirement committee if you will, but one of the benefits of having a retirement committee is as the owner, it isn’t just the employee coming in and talking to you about something or raising an issue and you have to make it on your own, they now know there’s a group of people that make this decision.


So it’s not as personal if you will.

Right, right. So it’s not just the owner making a decision, there’s a committee and also if there isn’t a committee, who is the defacto fiduciary?

The business owner.

Right, so having a committee is probably a little bit of a buffer, right, although ultimately they are responsible. So give us a couple of best practices for the retirement committee.

Well the biggest thing for the retirement committee is making sure that they have the administration rules written down. In other words, what they say they’re going to they’ve got them written down. And then the next most important thing is to do it, to follow those rules, and to review them periodically. If they realize their now doing something different than what they wrote down a couple years, then update it, because the most important thing in a fiduciary practice is to make sure you’re doing what you said you were going to do.

Which means you should probably read your plan documents, right?

Oh, you should definitely be knowledgeable about the plan document, absolutely.

Yeah. Oh, that’s great. Well, that’s great advice on the retirement committee. I like the fact that you call it a retirement committee and not investment committee because then a retirement includes investments, but then you don’t focus just on investments.


So great, well thanks for your time today.


Thank you for watching the NIPA 401kTV monthly video. Stay tuned.


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