Now that you have formed your retirement plan committee with all the right representatives, you’re good to go, right?
Not just yet.
You should also adopt what is called a “Committee Charter”. The committee charter operates in conjunction with the plan’s retirement committee. The charter committee is formed to provide an established foundation for any on-going grievances as well as the allocation of fiduciary responsibilities which are implied in the operation of your retirement plan.
A committee charter should very clearly show the committee’s structure along with all responsibilities and objectives, keeping consistent with the committee’s formation of “best practices”.
ERISA + COMMITTEE CHARTERS
A committee charter, should be consistent with ERISA principles and fiduciary objectives, such as; maintaining any exclusive benefits for plan participants and their beneficiaries. The charter should also carefully execute fiduciary responsibilities and diversify investment options while ensuring the plan operations are in conformity with the plan documents and any applicable laws.
Utilizing these objectives from the start of all committee activities, will help to keep your retirement plan in compliance with ERISA.
THE CHARTER COMMITTEE AND THE BOARD
Your Charter committee will describe your Board’s authority to delegate the responsibilities of fiduciary as well as any other committee responsibilities. No “one-person” or “group of people” can manage everything your plan needs to be a successful retirement plan. By delegating, you ensure the duties of the plan sponsorship are the result of completed and timely duties of the plan sponsorship working together as a team.
While monitoring investment options that are available is very often delegated to the plan’s finance department, the assistance of an investment adviser may be critical to the management of the plan. Therefore, it’s vitally important that the committee charter clearly list all responsibilities of each member and any delegates that will be executing responsibilities.
401(k) PLAN CHARTER COMMITTEE MEETINGS
A committee charter will also recommend the frequency of committee meetings to review and discuss the plans operations. These meeting are generally set-up to occur quarterly. There may be a need for more frequent meetings in the event of an extraordinary economic market circumstance or other organization activities. To ensure that all committee members attend meetings regularly, a committee chairperson will be appointed to preside over the meetings.
There are many fiduciary responsibilities for plan sponsors to not only understand but successfully execute to stay in compliance with ERISA. At Anders CPAs + Advisors we specialize in retirement plan audits. For more information on how we can help, request a free consultation. For assistance, contact the team at (314)-886-7913 to schedule an appointment.
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