Categorized | Pension

Retirement Plan Fiduciary Monitoring Checklist/Questionnaire

Posted on 20 October 2009

Quiz Photo_20091020This quiz will help you determine whether or not you are on the right track as a retirement plan fiduciary.  It is not meant to be an all-inclusive, exhaustive review of every aspect of a sound fiduciary process for a qualified plan sponsor.  This quiz does however cover a number of issues that retirement plan sponsors should consider and may help indicate whether further review of your internal procedures is warranted.

Can you confirm that your plan has an up-to-date, IRS approved document that has been properly amended for all the required changes?  You should consult with the third party administrator for your plan if you are not certain.



Have you reviewed your overall plan design to confirm that it is currently meeting your objectives?  For example, do you have the most effective method for allocating your profit-sharing contribution, matching contributions, etc.?



Have you received an up-to-date Summary Plan Description (SPD) from your plan’s third party administrator and have you distributed that (SPD) to your participants in accordance with the law?



Do you, or anyone related to you, have ownership in other businesses?  If yes, have you consulted with a professional to determine if a control group exists? (If no one related to you has ownership, mark yes)



Have the fiduciaries for the retirement plan been clearly identified and made aware of their responsibilities and liability?



Has a retirement plan committee or an investment committee been appointed and do they meet on a regular basis?



Does the plan have a formal, written policy for selecting and monitoring investment options?  For example, does the plan have an Investment Policy Statement (IPS)?



Does the investment due diligence process outlined in the IPS conform to a defensible fiduciary standard of care?  Excellent best practices for the selection and monitoring of money managers by investment trustees can be found on the Foundation For Fiduciary Studies site.



Do you periodically perform a review of the cost associated with servicing your retirement plan?  Costs and fees reviewed should include fees assessed by the administrator firm, the record-keeping firm, the investment consultant, the money managers and any other service providers.



Are employee salary deferrals deposited to the plan as soon as administratively possible after being withheld from the employees’ pay?  It is a best practice to deposit employee salary deferrals into the retirement plan trust account within 24 hours of being withheld.



Is your plan covered by a pension fiduciary bond of at least 10% of the plan's assets?  A good practice is to confirm that coverage is adequate on an annual basis.



Does your retirement plan have investment options across a broad range of categories including a stable value investment, guaranteed investment contract (GIC) or money market fund, high-quality bond funds, large cap stock funds, small and mid-sized company stock funds and foreign stock funds?



Have the plan's investment options been carefully reviewed relative to a prudent standard within the last 12 months?



Was that review presented to and approved by the plan’s trustees or investment committee and was this documented?



Was this review completed based on the retirement plan’s Investment Policy Statement?



Does the plan have a written procedure in place for removing an investment option that is not meeting the requirements stated in the plan’s Investment Policy Statement?  Can you demonstrate that this process has been followed in the past?  For example, do you have a watch list of funds that you are currently monitoring more closely?



Do you have an open architecture plan?  For example, can you offer most publicly traded mutual funds in your plan or are you required to offer investment options manufactured by one particular firm?



On at least an annual basis, do you offer comprehensive retirement and financial education to your participants designed to teach them how to make the best use of their qualified retirement plan?



Does your retirement plan’s provider offer complementary one-on-one counseling for retirement plan participants that have questions that they are not comfortable discussing in a group setting about their personal participant account?



Does your plan provide updated employee educational materials on an annual basis?



Does your retirement plan offer asset allocation funds or model portfolios that allow participants to make one investment choice and have a professionally designed portfolio that is automatically rebalanced based on their personal risk tolerance?



Does your retirement plan offer target retirement date funds that rebalance annually based on a specific future targeted retirement date?  These types of funds generally become more conservative in their asset allocation strategy as this target date is approached.



If your plan intends to voluntarily comply with regulation 404(c), have you indicated your intent to comply on the plan’s Summary Plan Description?



If your plan intends to voluntarily comply with regulation 404(c), have indicated your intent to comply on the plan’s IRS Form 5500?



Has your plan designated the default investment option as a Qualified Default Investment Alternative (QDIA) and can you confirm that this investment option meets regulatory guidelines to qualify as a QDIA?  If a plan sponsor has a QDIA in place they can gain protection from liability when participants do not make an investment election.





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This post was written by:

Dean Piccirillo - who has written 14 posts on R. Dean Piccirillo, CFP®, CRPS®, AIFA®.

Dean is a Principal at HBK Sorce Financial LLC and a Senior Financial Advisor. He works closely with families helping them plan for their long-term financial objectives, manage their financial assets effectively and preserve their wealth for future generations. Dean also leads the firm’s Retirement Plan Unit working with most of HBK Sorce’s corporate and institutional clients sponsoring qualified retirement plans.

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Dean Piccirillo offers insurance products through HBK Sorce Insurance LLC, investment advisory services are offered through HBK Sorce Advisory LLC. Mr. Piccirillo is not able to transact business in a state that he is not licensed or registered. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPLE. NOT INSURED BY ANY STATE OR FEDERAL AGENCY.

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