By Mark Olsen, Managing Director at PlanPILOT
To function as a successful plan sponsor, you need a retirement plan committee that helps your company organize and administer employee plans, such as the 401(k) or 403(b). While ERISA does not require the committee itself, committee members can keep your organization in compliance with all established regulations. To help you get the most out of your retirement plan committee, we’ve compiled several strategies for your consideration. Could implementing any or all of the following enhance your retirement plan committee’s performance?
Commit to Education
One of the challenges of maintaining a successful retirement plan committee is that there are no formal job titles or descriptions. And yet it is vital that committee members have the qualifications necessary to administer and manage employee retirement plans.
For example, committee members should be properly trained to understand their role as fiduciaries. This means acting in the best interests of retirement plan participants and their beneficiaries—and not the plan sponsor. Offering both preliminary and ongoing training can reinforce this distinction in the minds of committee members for a more effective team.
Similarly, it’s important for committee members to stay informed about evolving regulatory issues, such as changes to ERISA, DOL, or IRS requirements. Quarterly training sessions can keep your team apprised of any changes and can also create a layer of accountability to maintain fiduciary responsibility. With the passage of SECURE 2.0, there are a number of important items to discuss for potential plan adoption.
Delegate Tasks Appropriately
One of the most important benefits of a retirement plan committee is the ability to delegate tasks to committee members. For instance, you could divide your committee into segments, each one handling such roles as fiduciary oversight, administrative processes, employee communications, and settlor functions.
Delegating these tasks can also help fine-tune your education and training initiatives. Some committee members will benefit from specialized legal and regulatory training, while others may be better served by learning more about plan options.
Dividing your committee’s responsibilities may also assist in bringing on new committee members. Those with more experience in their committee assignment can serve as valuable mentors for new members and can demonstrate the best practices of retirement plan management. Providing some historical context for prior plan decisions is an invaluable benefit to new committee members.
Reflect Your Company’s Diverse Demographics
Sixty percent of American organizations have some type of diversity, equity, and inclusion (DEI) program in place. But does your retirement plan committee reflect this commitment to diversity and inclusion?
Historically, access to retirement plans for people of color has lagged behind that of their white peers. Your committee can be a part of your pursuit of inclusion and an accurate reflection of the makeup of your workplace. That starts by populating your committee with representatives from every age group, ethnicity, gender, and socioeconomic background. These representatives can provide guidance on how best to serve the needs and concerns of all groups under your employ—and the benefit is that this guidance comes from your committee’s own lived experience.
Documentation and Transparency
Given your committee’s fiduciary responsibilities, it’s important to document your decisions and activities. Consider appointing a secretary to record agenda items for each meeting, then record the minutes of each meeting and any action items that rose to the surface.
This is especially true when your committee implements changes to your company’s retirement plan. These changes, as well as any salient discussion points that led to those proposed changes, should be carefully and clearly documented.
Does your retirement plan committee operate under a committee charter? While it’s not legally required, a written charter can help you stay organized and delegate who has fiduciary responsibility. A charter can also contribute to your legal defense in the event of a lawsuit.
Comprehensive Retirement Plan Consulting
Need a little more guidance? PlanPILOT is here to help! We offer a comprehensive approach to retirement plan consulting, and our consulting services can also keep your company up to date on the latest trends. The right advisors in your corner can help your organization deliver retirement benefits that serve the needs of participants while mitigating risk to your company. It’s a win-win!
To get in touch, call us at (312) 973-4913 or email mark.olsen@PlanPILOT.com. We look forward to hearing from you!
About Mark
Mark Olsen is the managing director at PlanPILOT, an independent retirement plan consulting firm headquartered in Chicago. PlanPILOT delivers comprehensive retirement plan advisory services to 401(k), 403(b), and 457 plan sponsors. His specialties include plan governance, investment searches, investment monitoring, and plan oversight. Mark is recognized as a leader in the industry and speaks at national conferences, including those organized by Pensions & Investments, Stable Value Investment Association, and CUPA-HR.