What is your new year’s resolution?
For 401(k) plan administrators, it is a good time to go over the plans’ operation and make changes where needed. Here are a few tips on how to make sure your plan is ready for the New Year:
- Make sure amendments made to the plan in 2016 are signed and being followed.
- Your documentation for any 2016 change needs to be complete. Do you have proof of authority to make the change, such as a corporate or committee resolution? Was the amendment signed? Were participants notified of the change?
- Make changes to the plan for 2017, if needed.
- Do you need to consider changing matching or profit sharing contributions? Maybe there needs to be changes to distribution requirements or participant loans? Maybe do away with loans altogether?
- Make sure your 2016 committee meeting minutes are organized and schedule your 2017 meetings.
- Most 401k plans allow the plan sponsor to appoint a committee to administer the plan. Regular tasks can be delegated further to managers or administrative staff, but the committee retains oversight authority. Committees should meet at least quarterly and those meetings should be recorded in meeting minutes.
- Consider if the delegation of authority needs to be changed in order to make things easier and more compliant.
- Is your HR Manager signing contracts and the Form 5500, but has no actual authority to do so? Does the plan say that the company is supposed to be determining a participant’s eligibility to receive a hardship distribution, but someone in the Benefits Department is actually handling that?
- Decide whether you should have an outside company prepare a benchmarking report. Or do an RFP for any third-party providers.
- How long has it been since you have reviewed the plan’s record-keeper? Is it time to look at the investment advisor? Are you satisfied with the services? Have you benchmarked the plan fees lately? Generally, plan service providers are reviewed every three to five years. Just because you have had a longstanding relationship with a provider does not mean keeping that provider is in the best interest of the plan participants.
Plan administrators that address these potential 401(k) plan improvements in 2017 will be rewarded with great 401(k) plans.
For any questions regarding your 401(k) plan please contact our Employee Benefit Plan team leader, Maria Arriola at 714.569.1000.
