A NON-TECHNICAL REVIEW OF QUALIFIED RETIREMENT PLAN LEGISLATIVE AND ADMINISTRATIVE ISSUES
RETIREMENT PLANNING IS A TEAM SPORT
SOME WOULD SAY THAT RETIREMENT PLAN ADMINISTRATION IS A TEAM SPORT ! Putting together technical and compliance competence with ongoing investment and fiduciary expertise is key to keeping your plan healthy and participants happy . So , what roles and responsibilities should you look to fill for your firm to have a successful and compliant plan ?
The first and most important role is you , the Plan Sponsor . Plan Sponsors elect to establish the plan and offer it to their employees . Though many employers act as the named Plan Administrator of the plan , to ensure a successful outcome , they assemble a team of professionals to fulfill the key roles that keep a plan on track . The team ’ s goal , following the direction of the Plan Sponsor , is to deliver a program that provides retirement security for the plan participants .
KEY TEAM PLAYERS
Beyond the sponsorship and ultimate oversight of the plan , the following are key roles which are vital to a well-run plan .
Third Party Administrator ( TPA ) – Not to be confused with the named Plan Administrator , the TPA plays a critical role in the maintenance of the plan and the coordination of the team . The TPA is typically the “ go-to ” resource for HR personnel for questions regarding the day-to-day operation of the plan and the coordinator among other service providers in the plan ’ s ecosystem . More than reliable customer service , TPAs are trained professionals that provide technical expertise to ensure the plan complies with current regulations governing retirement plans . ERISA , DOL regulations , and case law are complex and frequently change . Compliance is daunting , and penalties and back taxes can be significant . So , it is important that a dedicated TPA is engaged . Common duties include :
• Providing guidance on plan design .
• Preparing and maintaining legal plan documents .
• Performing compliance testing .
• Preparing annual valuations and benefit statements .
• Completing and filing all forms with the government .
• Performing non-discrimination testing .
Financial Advisor – An equally important counterpart to the TPA role is the plan ’ s financial advisor . In tandem with the TPA , advisors help Plan Sponsors decide the goals for the retirement plan . These goals are then translated , with the TPA , into a plan design and ultimately a written plan document that guides the operations of the plan from year to year . The financial advisor also helps the Plan Sponsor select and monitor the investments in the retirement plan . In a 401 ( k ) plan , where participants may direct their account balances , the advisor will assist the Plan Sponsor in selecting a recordkeeping platform and a line-up of investment options from which the plan ’ s participants will choose . The advisor may also :
• Oversee investment meetings .
• Act as a guide and educator to the plan ’ s participants through the initial enrollment process and subsequent enrollment meetings .
• Act as a co-fiduciary to the plan .
BENEFIT INSIGHTS SPRING 2021