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Retirement plan fiduciary is a vital role; here’s how to do it

To be an employee retirement plan sponsor effectively makes you a fiduciary of the plan.

To be an employee retirement plan sponsor effectively makes you a fiduciary of the plan.

The sponsor is responsible for compliance with the Department of Labor, Internal Revenue Service, third-party administrators, and, most importantly, plan participants.

For the participants, their retirement assets are at stake, so failure to meet your fiduciary responsibilities can result in personal liability.

Here are a few best practices about meeting these responsibilities:

A plan sponsor must understand the terms of the plan document and ensure the document is current. The plan document will contain the key aspects of how the plan is to operate, such as the definition of an eligible participant, plan entry dates, the definition of compensation, employer match considerations, rollover contributions, investment options, vesting and distribution rules, to name a few.

Always maintain a signed and executed copy of the plan document; it’s needed should there be any examination or audit by the DOL or IRS.

Establish and maintain a pension benefit committee. A committee that convenes for the purposes of ensuring the plan is operating properly is one of the best ways a fiduciary can document all important processes and decisions.

Documentation can demonstrate that a fiduciary was acting in the best interests of the plan and is necessary when trying to limit liability should this come into question.

A pension committee should meet at least quarterly, and meeting minutes always should be maintained.

Discussion items may include plan operations and compliance, investment performance, plan filing deadlines, employee feedback, fidelity bond insurance compliance and a variety of topics applicable to plan operations.

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