Broker Check

The Seven Simple Plan Sponsor Truths for 401(k) Plans

  1. You are a fiduciary, which means you:

    1. Act solely in the interest of plan participants and their beneficiaries with the exclusive purpose of providing benefits to them.
    2. Carry out your duties as a prudent plan sponsor.
    3. Follow the plan document
    4. Diversify plan assets

  2. You CAN delegate your fiduciary responsibilities

    1. Hire an outside Fiduciary.
    2. Named fiduciary can CONTROL-MANAGE the operation and administration of the plan.

  3. You MUST understand your plan's fees. ALL fees

    1. Explicit Fees – Implicit Fees
    2. Administrative Costs
    3. Recordkeeping Fees
    4. Custody Fees
    5. Trustee Fees
    6. Brokerage Fees
    7. Investment costs

      1. Investment Management Fees
      2. Expense Ratio
      3. Bid – Ask Spread Cost
      4. Short term Trading Fees

  4. Ask the RIGHT questions of (Benchmark) your current provider. Proper benchmarking involves a review of:

    1. ALL FEES
    2. Investments
    3. Plan provisions
    4. Participant needs
    5. Comparison of similar types of plans
    6. Review Insurance Companies
    7. Are the investment offerings mutual funds or group annuities?
    8. Can participants transfer monies out of the fixed accounts without penalty?
    9. Are the investment offerings proprietary?

  5. MAINTAIN your investment policy statement

    1. Purpose & Background
    2. Statement of Objectives
    3. Guidelines & Investment Policy
    4. Securities Guidelines
    5. Selection of Money Managers
    6. Control Procedures

  6. Form an investment committee and MEET regularly

    1. The purpose of the Committee is to establish, execute and interpret the investment policy statement (IPS) for the plan
    2. The selection of the investment managers, custodians, and advisors to the plan (delegate).
    3. Monitor
    4. Formalize the process. Establish these procedures in writing
    5. Document

  7. MONITOR your plan!