Forming a retirement plan committee, even if all the right representatives are selected, is only the first step. You should also adopt a “Committee Charter,” which operates in conjunction with the plan’s retirement committee and the associated best practices. The charter committee is formed to provide an established foundation for any ongoing grievances as well as the allocation of fiduciary responsibilities which are important to 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 define fiduciary responsibilities and require diversified investment options while ensuring the plan operations conform 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 will describe your committee’s authority to delegate the responsibilities of fiduciary as well as any other responsibilities. No “one-person” or “group of people” can manage everything your plan needs to be a successful retirement plan. By delegating, you ensure all required duties can be completed timely and that they are coordinated across all individuals assisting in plan administration.
While monitoring available investment options may be delegated to the sponsor’s finance department, the assistance of an investment adviser may be used to assist in the evaluation of plan investment returns. It is important to clearly define the responsibilities of those inside and outside the organization so there is no missed steps or confusion over rules. Ensure your 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 plan’s operations. These meetings 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 organizational 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 not only to understand but successfully execute to stay in compliance with ERISA. At Anders, 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.
