Can you check all these boxes as a 401(k) plan fiduciary? This is a great way to make sure you’ve taken all the steps needed to responsibly administer your company 401(k) plan. This checklist is a fiduciary best practice guide for all 401(k) plan managers.

Below is a checklist of ongoing best practices for all 401(k) plan fiduciaries to consider. This list may not be comprehensive, for further guidance and information consult your ERISA counsel.

How do I know if I am a Fiduciary?

Do your duties cause you to exercise discretion over plan assets or administration (hiring service providers, making investment choices, spending plan assets, etc.). If so, you are a fiduciary and need to make sure you understand and comply with your duties.

Mitigating Fiduciary Liability

  • Consider establishing procedures for delegating fiduciary authority. For example, hiring a third party to act as a 3(38) investment manager or 3(16) administrator for your plan
  • Provide fiduciary education for new fiduciaries as well as continuing education for all fiduciaries. Many plan service providers will offer resources to help with fiduciary education

Overseeing Investments

  • Find out who is responsible for directing investments in your plan
  • Consider setting up a formal investment committee if you don’t have one
  • Consider developing an investment policy statement (IPS) documenting all of the plan’s investment requirements and processes
  • Consider engaging an independent fiduciary (like a 3(38) investment manager, or a 3(21) investment advisor) to help monitor the appropriateness of all investments options

Overseeing Service Providers

  • Conduct a periodic review of service providers to ensure that service and performance standards are being met
  • Periodically benchmark your plan’s fees and services to make sure expenses are reasonable for services rendered
  • Document the review, including meetings, issues discussed, and any decisions made
  • Familiarize yourself with the requirements of Section 408(b)(2) of ERISA
  • Conduct an in-depth review of service providers periodically to ensure that your fees and arrangements are consistent with current practices and costs and to determine whether a new request for proposal process is warranted
  • Assess the reasonableness of fees and whether any conflicts exist

Helping Employees

  • Talk to your service providers about providing required participant disclosures
  • Provide ongoing communications on investments and plan features (e.g., loans, distributions, or contributions)
  • Make sure all communications are accurate
  • Distribute information to all eligible employees regarding the investment options available under the plan
  • Consider conducting educational meetings and providing general financial information and investment education
  • Consider using automatic enrollment with a qualified default investment alternative (QDIA)

Plan Administrator Basics

  • Develop a compliance plan or calendar to keep track of the various deadlines throughout the plan year
  • Periodically review the plan documents to ensure that they reflect current practices and have been updated for legal and regulatory changes
  • Complete and file all required government reporting, such as the Form 5500
  • Comply with the applicable Internal Revenue Code nondiscrimination tests
  • Review the process for achieving the following in a timely manner:
    • Collecting employee contributions and loan repayments
    • Forwarding contributions and loan repayments to the service provider, and
    • Investing the contributions and loan repayments

Fiduciary Liability/DOL Audit

  • Maintain a well-documented, prudent fiduciary process for decision-making (Consider including documentation that decisions were actually made)
  • Consider obtaining liability insurance that protects plan fiduciaries from the costs associated with litigation (including unfavorable judgements)
  • Designate a point person (often an in-house or outside attorney) to coordinate and work with the Department of Labor (DOL) in the event of an investigation

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