By Paula Aven Gladych
Retirement plan committees for 401(k) and 403(b) plans
need to operate in the best interest of plan participants, according to Judith Rohr with Retirement Management Services. To that end, how the committee is organized makes a big difference in the outcomes of plan participants.
Committees serve an important role in making decisions for plan participants and their beneficiaries. RMS recommends that each committee member have a defined role on the committee. Organization is the key to keeping committees running smoothly.
It also is important to remember that at least one named person on the committee and in plan documents must serve a fiduciary function. A plan must have at least one fiduciary who has control over the plan’s operation. Plan fiduciaries include the trustee, investment advisors, all individuals exercising discretion in the administration of the plan and all members of a plan’s administrative committee.
Having a retirement committee enables plan sponsors to demonstrate compliance with fiduciary requirements by documenting all plan fiduciary decisions and ensuring there is a process in place for making decisions that are in the best interest of participants, RMS found.
may appoint committee members or even ask for volunteers, but “it should be stressed to them the important role they will play in making decisions for the plan participants and their beneficiaries,” Rohr said.
Each committee member should have a specific role, such as reviewing procedures or reviewing plan investment choices. The key is organization. It also should be assumed that any records kept at committee meetings will be used in case of an ERISA
A chairperson should be appointed to lead meetings and set agendas. Another person should take notes during the meeting. Decide on a meeting schedule, whether monthly or quarterly and have dates and times and meeting sites set so members can plan ahead.
Committees should be in charge of reviewing plan provisions, including all documents and amendments to plan documents. They also should review the plan’s design and make sure it meets company goals. Committees should review plan policies and procedures, the compliance report and nondiscrimination testing for the previous plan year and review their prior year investment choices to determine if changes are necessary.
Originally published on BenefitsPro.com