Managing Fiduciary Duties For Your Company's 401k Plan

As a fiduciary, you must operate in the interest of plan participants, establish a fiduciary process, demonstrate prudence with proper documentation and securely store documents.

Documentation is critical in fulfilling the role of the fiduciary and may span a wide array of both internal and external reporting requirements. Internal records should be maintained and readily available for review to verify compliance. External reports are required to satisfy plan participants, beneficiaries, and regulatory authorities that plan assets are being properly administered and wisely invested.

What's in your fiduciary vault?

Keeping proper documentation is a good way for plan sponsors and fiduciaries to show compliance with applicable laws and regulations. If the Department of Labor (DOL) or Internal Revenue Service (IRS) knocks on your door, the items below are some of the documents that should be complete and on file:

An organized fiduciary file is another way for your company’s plan committee to easily find, monitor, review, and evaluate your offering and discuss possible changes that seek to improve retirement outcomes.

  • Plan Document and amendments
  • Adoption agreement
  • Summary plan description (SPD)
  • Investment policy statement (IPS) (if applicable)
  • Fee policy statement (if applicable)
  • Education policy statement (EPS) (if applicable)
  • Loan policy (if applicable)
  • IRS determination or opinion letter (if applicable)
  • Copies of Form 5500 and summary annual report (SAR)
  • Required test results (ADP/ACP Tests)
  • ERISA Fidelity bond
  • Qualified domestic relations orders (QDROs) submitted to the plan
  • Signed Service Provider Agreements
  • All participant notices
  • Summary of material modification (SMM)
  • Individual benefit statement (IBS)

As a fiduciary you have 5 major responsibilities

Department of Labor. “Meeting Your Fiduciary Responsibilities.” DOL.gov. Sept. 2017

ONE

Act solely in the interest of plan participants and their beneficiaries.

TWO

Prudently carry out duties.

THREE

Follow plan documents (unless inconsistent with ERISA).

FOUR

Diversify plan investments.

FIVE

Pay only reasonable plan expenses.

DOL Plan Audits + Fines

Department of Labor. “EBSA Restores Over $1.1 Billion to Employee Benefit Plans, Participants and Beneficiaries." EBSA Monetary Results. 2017

%
of audited plans paid fines
$M
total fines from audits
$
average fine per plan

Can fiduciaries reduce liability?

FIRST - Operate in the interest of the plan participants.

SECOND - Establish a fiduciary process.

THIRD - Demonstrate prudence with proper documentation.

FOURTH - Securely store documents.

Let us help you with your retirement plan needs

Your retirement plan is one of the most important benefits you offer your employees. In fact, it may be the only way many are saving for the future. We can help you make your plan the best it can be.

Contact William Braddy

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance or tax/legal advice. Each plan has unique
requirements and you should consult your attorney or tax advisor for guidance on your specific situation.

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