Five Ways to Support Your 401(k) Plan

Jan 07

Are you managing your company’s 401(k) with limited or no support?  Sponsoring a retirement plan can be time-consuming and complicated. And, the company 401(k) places legal responsibilities on you as the plan’s fiduciary.

Under ERISA rules, plan fiduciaries must act as prudent experts. That means exercising a high standard of care when it comes to selecting service providers, choosing investments, and administering the plan.

As a 401(k) advisor, I not only take work off your plate, but I also help to reduce your liability by taking on a fiduciary role.  Bottom line, my biggest responsibility is to identify and mitigate your personal liability risk while helping to empower your employees to build assets for their retirement.

Below is a comprehensive schedule of the support that I would provide as your advisor.

Fiduciary Assessment and Compliance Oversight

With your schedule, you probably don’t have time to become a 401(k) expert.  I help to coordinate and communicate with members of your finance, HR, and ownership teams regarding items that need to be addressed from a compliance standpoint.

  • 3(21) or 3(38) Fiduciary Services.
  • Review discrimination testing to improve employee engagement
  • Review annual IRS Form 5500
  • Hold annual Investment Committee meeting
  • Fiduciary insurance and fidelity bonding review
  • Legislative/regulatory updates

Employee Education and Communication

Employee participation is a key measure of a plan’s success.  I help participants understand the plan, along with the investment options offered in the plan. Partnering with Vanguard, we are available to field employee questions relating to the plan or personal finances.

  • Help the participants understand the plan itself, along with the investment options offered in the plan through an initial enrollment meeting
  • Facilitate one-to-one employee meetings to guide mapping of old plan funds to new plan funds
  • Monthly e-newsletter covering a specific financial planning topic
  • Hold an annual education meeting

Performance Monitoring

ERISA requires prudent selection and monitoring of those 401(k) investments.   A 3(21) investment adviser is a co-fiduciary role, whereby I provide advice to you concerning funds on a 401(k) investment menu, and you retain the discretion to accept or reject the advice. A 3(38) adviser would allow me to have the discretion to make fund decisions.  Being that I am a fiduciary, I offer both options.

  • Identify investment options for your Plan to ensure a diverse lineup of investment funds
  • Perform ongoing monitoring of the investments held by or offered as investment options under the Plan which can help limit potential liability under ERISA rules

Investor Policy Statement

An Investor Policy Statement (IPS) defines the purpose, objectives, and measures of success for the plan.  Once an IPS is created, the investment committee must adhere to it unless it is imprudent to do so.  Having an IPS helps to reduce your liability.

  • Develop and implement an Investment Policy Statement (IPS)
  • The IPS will establish guidelines as to investment portfolio characteristics, the performance of duties, and investment process and philosophy.

Plan Administration Support

Being an expert in all things 401(k) is a tall order.  I consult with you on plan design or the implications of an employee match or vesting schedule.  The potential administrative advantages as well as the cash flow implications of a safe harbor plan compared to a traditional 401(k).  I can also explain how automated enrollment and employee engagement can reduce the need for a safe harbor approach.

  • Communicate and coordinate with Vanguard to keep the plan running smoothly
  • Consult with you on plan design or the implications of an employee match or vesting schedule
  • Identify potential administrative advantages such as a safe harbor plan, automated enrollment, automated contribution increase which can help limit potential liability
  • Review Plan metric objectives outlined in Investor Policy Statement (IPS)

At TAMMA, I have designed an entire series of 401(k) best practices devoted to supporting businesses of any size to help you reduce potential liability and provide a plan that best serves your employees.

Again, my biggest responsibility is to identify and mitigate your personal liability risk while helping to empower your employees to build assets for their retirement.

Contact us for more information about any of these best practices or to see how we may better support your company and employees with a low-cost, high service employer-sponsored retirement plan.