Qualified Plan Governance: Is Your Fiduciary House in Order?

As we enter the New Year, many qualified retirement plan sponsors use this time as an opportunity to examine current fiduciary structure and processes to ensure all is in order.

Whether or not your organization’s retirement plans have been recently audited by the Department of Labor and/or Internal Revenue Service, it is advisable to be sure your plans will hold up under such audit and/or plan participant scrutiny, and that the proper protections for the Company and its designated fiduciaries are in place.

When reviewing your current fiduciary structure, policies and procedures, we suggest the following considerations:

1. If none exists, establish a formal internal Committee to include appropriate representative leadership members.
2. Conduct fiduciary training to educate Committee members on their responsibilities under ERISA and attendant, personal fiduciary liability.
3. Examine, assess and modify current processes - and be in a position to address and answer the following questions:

• Does a written Committee Charter exist? If so, does it need to be updated to reflect the current structure, governance, membership, etc.?
• Has each Committee member signed a written acceptance of his/her responsibilities?
• Are regular Committee meetings held to review plan investments and administration?
• How are decisions made and documented?
• Are minutes kept to document and memorialize committee meetings, attendance, votes, actions, etc.?
• Have previous authorized actions been executed (e.g., investment changes)?
• Does the plan have a written investment policy? It is not required by ERISA, but having and following one is considered the best practice.
• Is fiduciary liability insurance, and/or a company indemnification provision, in place to protect the individual fiduciaries in the event of individual or class action civil litigation?

1. Confirm all required, and related, plan documentation exists and can be easily accessed

• Plan document and amendments (fully-executed)
• Summary Plan Description (SPD)/Summary of Material Modifications (SMM)
• ERISA §404(c) disclosures and general compliance
• ERISA §404a-5 participant fee disclosures
• Favorable IRS Determination Letter
• Service provider agreements/ERISA §408(b)(2) fee disclosures
• Service provider selection/monitoring process and outcomes
• Parties-in-Interest
• Compliance testing results, and corrective action, if applicable
• Government audit results, and corrective action, if applicable
• Self-audit results, and corrective action, if applicable

With this review made and necessary corrective steps taken, plan fiduciaries will take comfort in knowing their collective fiduciary house is in order and will pass muster under government review, and plan participants will be assured that the Committee’s decisions and commensurate actions are being made with their sole and best interests in mind.

If you have questions about, or need assistance with, achieving this result, please contact your Plan Consultant.

~ Charles Catagnus, Senior Plan Consultant

About the Author, Charles Catagnus

Charles Catagnus is a Senior Plan Consultant with more than 30 years of experience in the retirement plan service industry. Charles joined NFP Retirement in January 2013 and brings experience with qualified and non-qualified plans in both the private and public sectors. His focus is plan design, administration and recordkeeping, investment analysis, provider evaluation, regulatory compliance, fiduciary governance, and participant education/communication. From his office in Collegeville, Pennsylvania, a suburb of Philadelphia, Charles consults plan sponsors and participants on a variety of retirement-related topics. Charles received a B.S. in Business Administration from Temple University. He has passed the following FINRA exams: Series 6 (Investment Company Products/Variable Contracts Representative), 26 (Investment Company Products/Variable Contracts), 63 (Uniform Securities Agent State Law Exam) and 65 (NASAA-Investment Advisors Law Exam).
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The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. Any decision to invest according to investment advice provided by NFP Retirement should be made after conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment. Securities may be offered through NFP Advisor Services, LLC (NFPAS), member FINRA/SIPC. Investment Advisory Services may be offered through NFP Retirement. NFPAS is affiliated with NFP Retirement Inc. To remove yourself from this list, or to add a colleague, email us at retirementinfo@nfp.com or call (949) 460-9898. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax advisor, investment professional or insurance agent.

NFPR-2015-2 ACR#135123 01/15