3 tips for improving your retirement plan’s fiduciary file

It’s that time of year for many retirement plan sponsors as they put the finishing touches on Form 5500, the annual employee benefits report required to be filed with the IRS. It’s also an ideal time for sponsors to take a deep dive into the retirement plan fiduciary file to improve documentation and avoid any compliance-related squabbles with Uncle Sam.

Many employers underestimate the value in having a comprehensive, well-organized fiduciary file — the 20-30 agreements, contracts and written plans that compose any retirement plan. The effort spent organizing your files will give you more time to find ways to improve the plan. Just think: No more scrambling to find or update plan documents at the last minute when filing your 5500.

Remember that you, as plan sponsor, are responsible for keeping your company’s retirement plan in compliance. Here are three best practices to make sure the fiduciary file helps you accomplish that goal:

1. Always have a fiduciary file checklist

Every plan sponsor needs to have a comprehensive checklist of all documents — and where those documents are located — in the fiduciary file. Yes, this should be obvious, but you’d be surprised at how many plan sponsors have an incomplete list and/or can’t easily locate required documents.

Confer with your retirement plan advisor to make sure you have all the necessary documents on file. The more time spent finding documents means less time helping employees with their retirement savings needs. Here’s a sample of the documents that should be included in your checklist:

●       Regulatory audits: The plan adoption agreement, Form 5500, IRS opinion or determination letters, fidelity bond agreements, trust agreements, investment policy statements, lists of all fiduciaries, trustees, consultant and plan administrator agreements

●       Administrative functions: Corporate board resolutions, board meeting minutes, fiduciary roles and responsibilities

●       Investment monitoring: Investment account statements, investment committee meeting minutes (if applicable)

●       Participant communications: Section 404a-5 participant fee disclosure, automatic enrollment notices, QDIA notices and event communications

This list just scratches the surface, but as you can see, there’s a forest of paperwork that has to be organized. The checklist is your go-to document to keep you organized. It also will serve as a constant reminder of what files you — and anyone else who is involved in managing your plan — need to keep current.

2. Document procedures, processes and roles

A word of advice on managing processes and procedures for something as complicated as a retirement plan: If it’s not written down and documented, then you haven’t done it. Just ask any auditor.

Written documentation of operational procedures is essential so everyone involved with your company’s plan administration can see how important processes are managed. These documents function as the primary resource guide and describe the key roles, responsibilities and tasks so the team understands who’s doing what, how it’s being done and when it’s getting done. Written documentation also provides auditors with necessary evidence to show how your company is managing the plan.

3. Make reviewing your fiduciary file a quarterly priority

Far too many employers look at reviewing their fiduciary file as an annual event. Don’t fall into that trap. A lot can change in a year — new federal regulations could be adopted, employee demographics could change due to staffing needs or executives involved in plan governance could leave the company.

Reviewing your plan quarterly will help to assure that you follow the terms of your plan. Many plans conduct a quarterly investment review, but few go beyond just the investments. Take advantage of these review meetings by adding fiduciary training, reviewing any issues that surfaced the prior quarter, and discussing upcoming changes.

Managing your company’s retirement plan can be a challenging, thankless task. But when you follow these tips, you’ll sleep better because you will have a plan that’s properly documented and working in the best interests of your employees.

Linde Murphy, CRCP, serves as managing director for Argent Retirement Plan Advisors, a Registered Investment Advisor with the SEC that specializes in providing fiduciary and investment advisory services to employer sponsored qualified and non-qualified retirement plans. Linde, who has more than a decade of experience in the financial services industry, works with corporations, nonprofits and municipalities to design high quality and cost-effective retirement plans. Prior to joining Argent, she was chief operating officer and chief compliance officer of M.E. Allison & Co., an investment banking firm specializing in municipal finance.

Argent Retirement Plan Advisors, LLC is a Registered Investment Advisor registered with the Securities and Exchange Commission. A current copy of our written disclosure statement is available at no cost upon request.

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