A Retirement Plan Checkup: How Healthy is your program?

Written by Ava Carnevale, AIF®, CPFA
Published April 24, 2018

Each year, we’re advised to go to the doctor to get an annual physical. Even if we’re feeling great, we still make the appointment and set aside some time to be assured that we’re not missing any warning signs for something that might not be showing up at the surface of our health. These check‐ups can save lives and medical expenses down the road.

Plan sponsors should be advised to be doing the same thing with the retirement program. Though it might seem to be operating just fine, there might be a few loose ends that aren’t so obvious if you don’t take a deeper dive. Offering a retirement plan to your employees can definitely enhance your benefit package, but it requires attention from the Plan
Sponsor, the HR Team, and even the business owner(s). Aside from the typical time you spend on the retirement program, each year should have a few hours dedicated to the process of reviewing and doing a few important items.

Review the plan document. This refers to the document that governs the administration of your plan. Take a moment each year to review it, make changes to certain features (i.e. Adding Roth or Auto‐Enrollment) and confirm that the day to day tasks are operating according to how the plan is set up.

Evaluate and sign an updated IPS. Your investment policy statement (IPS) should be reviewed annually to make sure you still agree with the philosophies set forth. This can also give your team a refresher on the investment protocol and an opportunity to add or remove individuals from the Retirement Plan Committee. Another benefit is that you will have to set aside some time to monitor the performance of the investments.

Benchmark your plan. There are many retirement plan providers in the industry and we are all held accountable to a certain standard of care. By benchmarking the fees within your retirement plan, you will be able to see what you are paying, what a suitable cost to be paying looks like, and what others similar to you are paying. This could help reduce costs or reevaluate providers to enhance or change levels of service. You can do this through third parties, some advisors, or by going out to bid to get quotes from different providers.

Educate your employees. Annually, set aside some time for your employees to be updated on the different features within the retirement program (i.e. Match, Profit Sharing, Annual limits) and to encourage them to join if they haven’t already. Knowledge is power when it comes to retirement savings – try to educate your employees so they’re ready to achieve their retirement goals.

These check‐up reminders can help Plan Sponsors meet their fiduciary responsibilities when administering a retirement plan. Some retirement plan advisors can help organize and complete these tasks on an annual basis. As you would your own health, be certain you’re aware of whether or not your plan has any symptoms or signs for a change. If it does, it’s always better to catch them early.

Feel free to reach out to your plan advisor, or a PGR Solutions representative, if you find that you need some help organizing these duties.

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