PLANSPONSOR - October/November 2019 - 54

ERISA EXAMINATION
Last Meeting
Of the Year
Time to create an annual work plan
A
nother year is winding down, and, at least for calendar
year plans, it's time for 2019's last committee meeting-
perfect for fiduciary-governance housekeeping!
Most committees meet on a quarterly basis, and certain items
should be covered at each of these regular meetings. For example,
here are standard agenda items for committees to address:
* Review and approval of prior meeting's minutes.
* Investment option review. This is typically presented by the
committee's third-party investment adviser to assist the committee
in monitoring the plan's fund lineup.
* Administrative update. Human resources (HR) presents an
update on any administrative steps taken in the past quarter or to
be taken in the upcoming quarter.
* Legal update. It's important for committee members to stay
current on the latest plan issues, such as fiduciary litigation and
regulatory compliance.
Map Out an Annual Work Plan
Besides the standard agenda items, there are issues the committee
should consider periodically. To make sure these responsibilities
don't slip through the cracks, we recommend that committees
create an annual work plan, setting out what additional
items should be considered and when. Set forth below is a list of
agenda items that should be considered once a year or, for some
of them, every few years. As there is no magic regarding which
meeting should cover these items, an annual work plan is useful
for spreading them throughout the year. This keeps them on the
radar but avoids cramming too many topics into one meeting.
* Target-date fund (TDF) review. While TDFs are included in
the quarterly fund review, given their unique nature we recommend
one annual deep dive to discuss how the funds operate and
the appropriate glide path.
* 404(c) compliance check. Plans that are 404(c) compliant
protect the committee from fiduciary responsibility for participant
investment decisions. To make sure those protections are not
lost, committees should periodically verify that all of the 404(c)
requirements are being satisfied.
* Plan amendments. These are generally approved at
the
last meeting of the year so the committee can adopt any changes
required for the existing or upcoming plan year.
* Review of plan governance information. It's a good idea
to annually review the committee's charter, investment policy
54 PLANSPONSOR.com October - November 2019
statement (IPS) and other related documents.
* Annual report to the board of directors. On an annual basis,
the committee should prepare and provide to the board of directors
a report regarding the committee's activities for the past year.
This provides the board with a means to monitor the committee
and its fiduciary delegation.
* Review of plan policies. For example, the committee may
consider any changes to loan and qualified domestic relations
order (QDRO) policies.
* Review of the past plan year's compliance tests.
* Annual fiduciary training. As we have noted in the past, the
Department of Labor (DOL) asks if the committee has had fiduciary
training. Providing an annual training can keep continuing
members on track and bring new members up to speed.
* Review of confirmation of government filings and annual
participant notices.
* Review of fiduciary insurance and bonding. Employee
Retirement Income Security Act (ERISA) plans are required to
have fiduciary bonds in place, and most committees want the
added protection of fiduciary liability insurance. These policies
should be reviewed periodically to make sure they are sufficient.
* Review of plan service providers. Committees should
consider issuing requests for proposals (RFPs) generally every
three to five years for services providers. Between RFPs, it should
discuss annually the current providers' fees and services.
* Distribution of updated copies of plan-related documents
to members. Plans must be operated in accordance with their
terms so it is important that committee members have copies of
the documents-e.g., plan document, summary plan description
(SPD), IPS, charter, etc. It also makes sense to have HR do a periodic
check to confirm operations are consistent with plan terms.
* Executive session. Committee members should be given an
opportunity to hold an executive session without service providers
to discuss whether any service provider RFP or provider changes
should be considered and to give members the chance to raise any
other matter for discussion.
Consider our suggestion-spread these tasks over a work
plan to make the tasks manageable throughout the coming year.
Summer Conley is a partner in the Los Angeles office of
Drinker Biddle & Reath LLP. Michael Rosenbaum is a partner
in the firm's Chicago office.
Art by Joseph Ciardiello
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