Five Questions Every Plan Sponsor Should Be Able to Answer

by: Smith and Howard

December 17, 2015

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As the spotlight on “Fiduciary Responsibility” intensifies, it is more important than ever that plan sponsors are fully aware of their responsibilities under by the Employee Retirement Income Security Act (ERISA). Plan sponsors should be able to answer to the following questions as they re-evaluate their responsibilities:

  1. Has the plan’s management identified fiduciaries inside and outside of the organization? Are internal fiduciaries aware of who they are and what their responsibilities are? When a new fiduciary is added to a plan, will he or she be properly trained? The Department of Labor (DOL) has provided a free online guide to help fiduciaries better understand their responsibilities.
  2. Are the plan managers properly overseeing the plan and appropriate plan procedures? Is there clarity when important tasks are completed? Is there clear and frequent communication from the plan oversight board?
  3. Is your money being handled well by plan management? Are your fees and investments being monitored properly? Two frequent problems the employee benefits plan (EBP) industry faces today are fees charged to the plan and its participants, and fees charged to the investment options that participants can select.
  4. Is a financial advisor being used by plan management to assist with investments? Are plan managers actually taking the advice into consideration and are the end decisions being accurately recorded? Do plan managers and the advisor both adhere to the established investment policy? If plan managers were to encounter a DOL/IRS audit, participant lawsuit or a similar form of examination, would these investment-related conclusions and actions be able to stand?
  5. If plan managers were to encounter a problem with the plan’s procedures, are they prepared to seek legal counsel with a specialty in ERISA issues? Will they be able to correct these issues in a timely manner? Though it is normal for plans to encounter some challenges, plan managers must have a strategic procedure in place to handle conflicts when they arise.

Plan sponsors need to fully understand their responsibilities for their plan and ensure that their plan’s management is sound. Whether you’re making sure that all of your actions and decisions are recorded accurately or planning out what to do in the event of an IRS inspection, those who are prepared will be in a far better position to ensure the plan’s future success.

If you have questions about your employee benefits plans or plan sponsor responsibilities, please contact Sean Spitzer or Lori Wagnon at 404-874-6244.

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If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.