Retirement plans can be complicated. With so many fiduciary responsibilities associated with a company’s retirement plan, it’s important to review best practices on a regular basis and familiarize yourself with the ever changing compliance landscape that comes with the role of a retirement plan fiduciary.
Retirement Plan Fiduciary: Suggested Best Practices
The experts at NPPG have created the following retirement plan fiduciary checklist to help plan sponsors manage compliance and fulfill fiduciary responsibilities. Consider the following best practices:
Be Diligent.
It’s important to be clear on your responsibilities and thoroughly understand the duties of your role to minimize the risk of penalties and fines. For example, a fiduciary must always act in the interest of plan participants and beneficiaries, educate new and current fiduciaries on developments in compliance and regulatory matters and act in accordance with the documents and instruments governing the plan.
Establish A Process.
Follow a retirement plan governance process that includes fiduciary roles, and compliance with plan documents. To protect yourself and your plan, document all issues, including detailed notes from meetings that discuss fiduciary responsibilities. Maintain all documentation that references your prudent fiduciary processes as proof of your due diligence.
Ensure Compliance.
A fiduciary must act diligently with care, skill and prudence to ensure that retirement plan documents and operations meet IRS documentation and operational qualification requirements. Review your plan design regularly and familiarize yourself with the necessary requirements.
Communicate.
Monitor operational compliance to determine whether participant transactions meet the various limits and timing requirements. Be sure to keep employees informed by providing them with the necessary fee and plan disclosures.
Review.
Complete in-depth plan reviews annually (or more regularly depending on the circumstances) with the help of a qualified fiduciary service. Include a review that considers how well the plan is operating, as well as one that identifies areas for improvement.
Streamline.
For any business, it is essential to find ways to streamline processes and control costs. Ease the administrative burden on staff and reduce retirement plan fiduciary risks by partnering with an appointed ERISA 3(16) plan administrator who can seamlessly implement and manage all plan details.
Retirement Plan Fiduciary Responsibilities According to the IRS
The responsibility to be prudent covers a wide range of duties required to operate a compliant retirement plan. The government considers fiduciaries to be in a position of trust with respect to the participants and beneficiaries in the plan. Duties and responsibilities of a retirement plan fiduciary include:
- Acting solely in the interest of the participants and their beneficiaries
- Acting for the exclusive purpose of providing benefits to workers participating in the plan and their beneficiaries, and defraying reasonable expenses of the plan
- Carrying out duties with the care, skill, prudence and diligence of a prudent person familiar with the matters
- Following the term of the plan documents
- Diversifying plan investments to minimize the risk of losses.
NPPG: Your Trusted Retirement Plan Fiduciary Service Provider
With increased complexities and risk of fees and penalties, a retirement plan fiduciary checklist can be an extremely valuable tool. Any mistake, such as failure to follow plan documents, or improper selection or delegation of retirement plan fiduciary functions can lead to potential red flags, which is why it may be in your best interest to consult experts.
Since 1997, NPPG has been providing retirement plan services, helping plan sponsors alleviate administrative burden and personal liability. As a full-service, “one-stop solution,” NPPG provides comprehensive fiduciary services, including: ERISA 3(16), as well as health and welfare plan documentation.
To learn more about partnering with a retirement plan fiduciary focused on your unique needs, talk with the professionals at NPPG. Give us a call at (732) 758-1577 to schedule an appointment.