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Retirement Plan Compliance An Important Issue

Retirement Plan Vesting

Retirement Plan Compliance An Important Issue

Retirement plan compliance is something that’s top of mind for many fiduciaries and plan sponsors, especially this time of year. Now is the time when retirement plan compliance has plan sponsors updating and organizing their plan documentation.   Retirement plan compliance is not an option.

With the regulations constantly in play and periodically shifting, it is difficult for plan sponsors to stay on top of retirement plan compliance and what seems to be an endless amount of fiduciary responsibility. Working alongside a retirement plan advisor — especially one that’s passed a third-party certification program, like The Certified 401k Professional, The C(k)P Designation — can help provide plan sponsors fulfill their fiduciary duties and keep tabs on retirement plan compliance.

In a recent article, BenefitsPro offered three ways plan sponsors can ensure retirement plan compliance and make their lives easier in the process by working with a retirement plan advisor who:

#1 Makes sure plan sponsors are following all retirement plan compliance documents: Ensuring retirement plan compliance means managing a wide variety of plan documents, which can be time-consuming. The IRS and DOL both oversee employer-sponsored retirement plans. The IRS deals with the tax-advantaged component, while the DOL handles fiduciary standards and reporting requirements. Both also conduct regular audits of retirement plans. BenefitsPro provided a partial list of retirement plan compliance documents that should be in plan sponsors’ audit file and ready for inspection:

  • Corporate charter
  • IRS approval letter
  • Summary plan documents and any amendments
  • Custodial or trust documents and any amendments
  • Current fidelity bond policy
  • Investment policy statements
  • Qualified Default Investment Alternative (QDIA) Notice
  • Investment committee meeting minutes

Many retirement plan advisors employ established processes to help with a plan sponsor’s retirement plan compliance processes.  This can make plan sponsors’ jobs much easier when it comes to managing all of these documents and preparing for an audit. In addition, a retirement plan advisor can “also identify potential problems, material weaknesses in internal controls or conflicts of interest so the annual audit will go smoothly for plan sponsors,” as noted by BenefitsPro.

#2 Confirms that the plan’s investment lineup is diversified: Certified advisors normally have proven methodologies to help plan sponsors ensure retirement plan compliance and that they’re fulfilling their fiduciary responsibilities by offering a diverse range of risk-appropriate investment options to help participants grow their savings over time. A certified advisor can also help plan sponsors choose fund managers with proven track records of investment success.

#3 Helps ensure plan fees are reasonable: The proliferation of retirement plan fee-related lawsuits in recent years has placed a spotlight on retirement plan compliance and fiduciary prudence when it comes to offering participants investments and plan features at a reasonable cost. An advisor can assist plan sponsors with retirement plan compliance by selecting reasonable and cost-effective investment options. A certified advisor can also help plan sponsors document the retirement plan compliance process, which shows they are fulfilling their fiduciary obligations to make sure the fees being paid are reasonable for the services being provided.

Plan sponsors can gain greater confidence in their retirement plan compliance if they choose to work with a Certified 401k Professional (C(k)P) retirement plan advisor. Partnering with an advisor isn’t a requirement, but it can help make plan sponsors’ lives much easier when it comes to ensuring retirement plan compliance and helping participants save for the future.

Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk
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