Employers --who make decisions about their 401k plans--are required by ERISA to employ a prudent process in the management and monitoring of their 401k plan investments. Plan Sponsors are required to not only look at the right information but also do it in the right way
Five best practices for fiduciary compliance of 401k investments. The five steps are practical moves to minimize your risk of a fiduciary liability lawsuit;
1. Review plan investments once a year
2. Produce a written report covering, the investments and their use by the participants. (Written reports are good evidence of due diligence)
3. Make decisions from the report about the quality and use of the investments
4. Review the plan's operations and participation levels.
5. Review the investment policy statement and determine whether it continues to be appropriate or requires improvement.
While this short checklist cannot capture all of the issues and deliberations in monitoring a plan's investments, this is a good start toward both fiduciary compliance and a successful plan.
Lawrence Groves has developed a sharp eye for how businesses get clobbered with retirement plan fees and how they can retool for a sleeker, smoother, strategically focused retirement plan. He also empathetically helps other business owners create the retirement programs that get results. Visit http://www.solo-k.com or http://www.womensolok.com or contact Lawrence at Lawrence@solo-k.com or 727-277-4137.
