Retirement Plan Sponsorship Responsibilities
Posted 5-20-2011 | By Christine Bentson
Companies deliver a great benefit to employees with the sponsorship of retirement plans. However, sponsorship comes with the responsibility to monitor and operate the plan in the best interest of the participants and beneficiaries of the plan.
Implementation and administration can become burdensome and expensive for employers if attention to compliance detail is overlooked. Below are reminders to make sure your processes and responsibilities as a retirement plan sponsor are protecting and supporting your plan and its participants.
If you sponsor a retirement plan, your service agreement or engagement letter should outline responsibilities for you and for your plan document provider, administrator and investment advisor. Know the answer to the following questions and make sure they are detailed in the agreement or engagement letter.
- Who is responsible for updating the document for law changes?
- Who is administering the plan?
- Who prepares and distributes applicable notices to participants?
- Who complies with the reporting and disclosure requirements to the government?
- Who tests the plan and when is the appropriate time to test the plan?
- What are the investments in the plan and the related fees?
- Are there any additional services that require additional fees?
- Who’s responsible for the fees initially and annually?
Your retirement plan documents should dictate plan features and help govern the plan’s operation. Make sure you completely understand your plan’s features, including but not limited to:
- Eligibility
- Types of contributions allowable by the plan
- Allocation of contributions
- Vesting
- Distributions-both in service and separation of service
- Plan compensation definition - must be understood by the payroll service
- Timely remittance of salary deferral contributions and loan repayments
Review your plan annually with your third-party administrator to determine:
- Is the existing plan still right for company?
- Is the existing plan accomplishing initial goals?
- Are there new features that could be added to the plan?
- Is the operation of the plan the most efficient and beneficial?
- Do you feel you are getting value for the plan?
For more information, please contact Christine Bentson, CPA, RPA, CEBS at cbentson@hlbtr.com or 651-407-5808.