PLANSPONSOR - February/March 2021 - 4
RULES & REGULATIONS
Plan Operational Know-How, 2021
P
lan sponsors that avoid errors in
plan operation will experience
fewer administrative headaches, as
well as less regulator intervention, which
could potentially lead to penalties.
Rachel Smith, a partner in law firm
Goodwin's ERISA [Employee Retirement
Income Security Act] and executive
compensation practice, says, to administer
a retirement plan correctly, it is
important to know the plan document.
" The vast majority of issues I come across
happen because the administrator didn't
understand the plan provisions, " she says.
" A common example is the definition of
compensation [in the plan document].
The administrator must know this to
make sure payroll is coded correctly and
that the payroll department is transferring
the correct data to the plan's recordkeeper
about the type of compensation and when
it was paid. Bonuses, commissions and
equity payments can trip things up. "
If the sponsor is unclear about the
4 PLANSPONSOR.COM February - March 2021
plan's eligibility rules as stated in the plan
document, this also frequently leads to
mistakes, she says. Not knowing " whether
participants can enter the plan immediately
or whether they have a waiting period
can create major headaches down the road. "
Administrative Policies
Leisha Gosling, new business consultant
at Retirement Management Services LLC
(RMS), advises plan sponsors to create a
written administrative policy, drawn from
the plan document.
This policy will lay out who is responsible
for what, including whether the
plan sponsor or a certain vendor handles
administrative services. It should state
who monitors the plan to ensure procedures
are done correctly. " For example, "
Gosling says, " will the plan sponsor or the
payroll vendor [confirm] that deferrals are
deposited on time? " Once all roles have
been defined and assigned, there should
be no surprises operationally, she says.
Because the administrative policy
reflects the plan document, it should be
updated when a pertinent plan amendment
is added. But, Gosling says, it is also
best practice to review the policy when
there is a provider change or a tax law
change, and at least every three years.
Provider Monitoring
Having a team of providers the sponsor
can depend on is also critical, Smith says.
The team would include " knowledgeable
people internally to monitor the plan " and
also good contacts at the recordkeeper,
making it " easy to get on the phone
and track plan terms and get questions
answered as they arise. "
Beyond cataloging administrative
roles and responsibilities, the policy should
also establish service provider selection
procedures and criteria, provider monitoring
procedures, and procedures for
replacing providers that prove inadequate.
It is a fiduciary duty to monitor
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PLANSPONSOR - February/March 2021
Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2021
Service for a Crowd
2020 PLANSPONSOR Best in Class 401(k) Plans
Shelter From a Storm
From Volatility to Stability
Are Annuities Good for All?
Regrowth Factor
When 'Herding' Helps
PLANSPONSOR - February/March 2021 - Cover1
PLANSPONSOR - February/March 2021 - Cover2
PLANSPONSOR - February/March 2021 - 1
PLANSPONSOR - February/March 2021 - 2
PLANSPONSOR - February/March 2021 - 3
PLANSPONSOR - February/March 2021 - 4
PLANSPONSOR - February/March 2021 - 5
PLANSPONSOR - February/March 2021 - 6
PLANSPONSOR - February/March 2021 - 7
PLANSPONSOR - February/March 2021 - 8
PLANSPONSOR - February/March 2021 - 9
PLANSPONSOR - February/March 2021 - 10
PLANSPONSOR - February/March 2021 - 11
PLANSPONSOR - February/March 2021 - 12
PLANSPONSOR - February/March 2021 - 13
PLANSPONSOR - February/March 2021 - Service for a Crowd
PLANSPONSOR - February/March 2021 - 15
PLANSPONSOR - February/March 2021 - 16
PLANSPONSOR - February/March 2021 - 17
PLANSPONSOR - February/March 2021 - 18
PLANSPONSOR - February/March 2021 - 19
PLANSPONSOR - February/March 2021 - 2020 PLANSPONSOR Best in Class 401(k) Plans
PLANSPONSOR - February/March 2021 - 21
PLANSPONSOR - February/March 2021 - 22
PLANSPONSOR - February/March 2021 - 23
PLANSPONSOR - February/March 2021 - 24
PLANSPONSOR - February/March 2021 - 25
PLANSPONSOR - February/March 2021 - Shelter From a Storm
PLANSPONSOR - February/March 2021 - 27
PLANSPONSOR - February/March 2021 - From Volatility to Stability
PLANSPONSOR - February/March 2021 - 29
PLANSPONSOR - February/March 2021 - 30
PLANSPONSOR - February/March 2021 - 31
PLANSPONSOR - February/March 2021 - Are Annuities Good for All?
PLANSPONSOR - February/March 2021 - 33
PLANSPONSOR - February/March 2021 - Regrowth Factor
PLANSPONSOR - February/March 2021 - 35
PLANSPONSOR - February/March 2021 - When 'Herding' Helps
PLANSPONSOR - February/March 2021 - 37
PLANSPONSOR - February/March 2021 - 38
PLANSPONSOR - February/March 2021 - 39
PLANSPONSOR - February/March 2021 - 40
PLANSPONSOR - February/March 2021 - Cover3
PLANSPONSOR - February/March 2021 - Cover4
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