If you are an organization sponsoring a defined contribution plan with more than $10 million in plan assets and are interested in a complimentary retirement plan review, please fill out this Contact Us Form.
The primary reason medical professionals recommend an annual checkup is that problems found early, especially when they are minor, generally are easier to fix. Similarly, a comprehensive retirement plan review can help plan sponsors identify existing or potential concerns that, if left neglected, may result in significant compliance problems, costly lawsuits, or negative impacts on plan participants.
Performing a regular review helps confirm that a plan is meeting applicable requirements under the Employee Retirement Income Security Act of 1974 (ERISA) and related Internal Revenue Service (IRS) and Department of Labor (DOL) regulations and guidance, which is one of the essential responsibilities of a plan fiduciary. In our experience, a thorough retirement plan review should include seven key components:
- Plan Design: Small plan design changes can have big results. Plan sponsors should consider whether existing features can be improved or if new features, such as a Roth contribution option, should be added.
- Plan Documentation and Operations: Failure to comply with operational requirements could jeopardize a plan’s qualified status and/or result in expensive remediation steps and penalties. IRS Publication 4531 provides a detailed list of review questions and remediation approaches which can be used for guidance on conducting a thorough and efficient operational checkup.
- Fiduciary Appointments and Procedures: Plan sponsors will want to maintain written documentation articulating who is a plan fiduciary and confirmation of their responsibilities. Further, they should verify that meetings are being conducted to discuss plan issues and that meeting minutes are being recorded and preserved.
- Investments: Every plan should have an Investment Policy Statement and the investment committee should use it to guide their decision-making process. Because investments are the means by which participants generate earnings to fund their future retirement income needs, it is critical to evaluate the continuing appropriateness of your plan’s investment offerings.
- Participant Services: Employee education and access to planning tools are the cornerstones of empowering employees to succeed in their retirement investing. Plan sponsors should consider if their employee education program and retirement tools are helping to drive employee success or if changes are needed.
- Plan Fees: Fee transparency has been a focus of the DOL in recent years, and plan fees have been the subject of numerous lawsuits brought by plan participants. It is incumbent on plan sponsors to conduct regular, formal reviews of fees and document the results of doing so.
- Cybersecurity: Per DOL guidance, plan sponsors should work to educate plan participants about the importance of strong individual cybersecurity practices and regularly review and document plan data safety protocols as well as the security protocols of service providers such as investment advisors, recordkeepers, and third party administrators.
PNC Institutional Asset Management® can help you conduct a review like this. If you are an organization sponsoring a defined contribution plan with more than $10 million in plan assets and are interested in a complimentary retirement plan review, please reach out to your PNC Representative or fill out this Contact Us Form.