Recently I was asked “what do I owe my employees” in terms of how we manage/review the retirement plan. That’s a great question and one that can make the difference between an effective plan and an ineffective plan. It’s also something we love to talk about at The Joseph Group.

When thinking about what a plan sponsor owes their employees/plan participants, there are a lot of rules, best practices and definitions that the Department of Labor regularly provides guidance around. There are many different resources available to help, but typically the best resource is one you already have, your existing or prospective plan partners. It can be your third-party administrator, your plan advisor, or your plan’s recordkeeper. While there are lots of technical elements it really boils down to three key aspects.

Pay Attention – It is your responsibility as a plan sponsor to both pay attention to the plan and how your employees engage with it. This can be making sure that employee deferrals are deposited in a timely manner (typically 7 business days following the check date) or making sure that the investment funds in your plan’s core menu are both appropriate for the team and doing what they are supposed to be doing. Paying Attention can also be listening to team chatter about their interactions with your plan’s vendors. If your team is running into constant issues with a particular vendor, maybe it’s time to re-evaluate your relationship with that vendor and either change to a new service structure or perhaps change to a new vendor. Also, make sure you pay attention to new legislation and how it impacts both your plan and potentially team members. If you don’t understand how to implement a new rule or the impact it will make, reach out to your plan’s third-party administrator and have a conversation. A 401(k) plan is meant to be a fantastic benefit for your team. You need to make sure it’s doing what it’s supposed to be doing and paying attention is really the first step.

Take Care – In many cases, your employees entire retirement nest eggs are contained within the retirement plan. Whether it’s $10,000 or $5,000,000, you want to take care of the plan and the employees. This can be taken in several different directions, but generally speaking, you as plan sponsor, want to be a good steward of your employees’ retirement capital. That could be making sure that your plan’s matching or profit-sharing contributions are accomplishing their intended goals. It could also be taking the time to meet with your advisor, at least annually, to evaluate the plan’s progress and fund lineup. One of the biggest mistakes plan sponsors make is when they make decisions around 401(k) vendors. The cheapest option is not always the best fit for your team, but that doesn’t mean you want to overpay for these services either. Making sure that your team is receiving the services that they are paying for and that those services are at a reasonable cost is critical. Whether that is making sure your recordkeeper has the appropriate tools that fit your team’s needs or that your advisor is providing/offering education to team members, reviewing these vendors periodically is critical. Each year we show our clients an annual fee benchmarking report that shows the average fees for a plan around their size and assesses if they are generally getting what they pay for, or if a change should be evaluated.

Process and Document – Making sure you have a process for all the “regular day-to-day items” as well as annual year-end requirements and that you are documenting your process will save you a lot of trouble down the road. Whether this is having a calendar reminder ahead of census due dates or how you reach out to former employees to make sure they know they still have funds in the plan, it’s important to have and document these things. There are plenty of articles and resources around the best practices of running an effective and compliant plan. All of these articles include different elements and recommendations, but the one thing they all highlight is to make sure that you have a process, you follow that process and you document it along the way. The Joseph Group has several resources in this regard that we would be happy to share with you. One example is our annual due diligence meeting. We meet with each of our retirement plan clients at least once a year to review the plan metrics and investment fund menu. We have a proven process, and we document this process, as well as the annual meeting  (including meeting minutes with signatures) so that if this were ever called into question, our plan sponsors will have the information at their fingertips.

The last thing we recommend is not being afraid to ask questions. If your recordkeeper uses a term or phrase that you don’t understand, ask for clarity. If your advisor is reviewing the investment menu and you don’t understand a specific term they used, ask for an explanation. You are not expected to become an investment advisor or legislative expert, but you should be working in tandem with your plan partners and generally understand the goals and objectives of the retirement plan. What we see is that when a company is truly sponsoring a healthy and effective retirement plan, all the plan partners are rowing in the same direction.

We have great connections with many different resources and plan partners that are best in class for what they do, and we are happy to connect you with these world class partners to help guide you. Better yet, when The Joseph Group is acting as your plan’s quarterback, you just need to make one call, and we will take it from there. If we need to reach out to a TPA for clarity or your plan’s recordkeeper for transactional assistance, we will take care of this and bring it back to you when it’s either resolved or needed. This is what we do and we love doing it. Don’t be afraid to reach out and ask. If you don’t currently work with us, we would love to provide you with a no-cost second opinion on your plan or even just meet with you to help provide clarity around how your plan operates. There’s no obligation to use us as your plan’s advisor, we just love to talk about retirement plans and help people run healthy effective plans.

Written by Matt Kruckenberg, Manager of Retirement Plan Services. Matt can be reached at 614-907-8639 or matt.kruckenberg@josephgroup.com