As a plan sponsor, fulfilling fiduciary responsibilities is essential for a successful retirement plan. In this blog, we will discuss plan sponsors’ fiduciary duties, offer guidance on effective fulfillment, and highlight best practices for managing duties and reducing risks.
Fiduciary Responsibilities of Plan Sponsors: Plan sponsors have duties like acting in participants’ best interests, exercising prudence, diversifying investments, following plan documents, and monitoring service providers.
Fulfilling Fiduciary Responsibilities Effectively: To fulfill fiduciary responsibilities effectively:
- 1. Educate Yourself: Stay informed about retirement plan regulations and best practices through training and advisors.
- 2. Create an Investment Policy Statement (IPS): Develop a comprehensive IPS outlining investment objectives, risk tolerance, and criteria for selecting and monitoring investments.
- 3. Document Your Process: Keep detailed records of decision-making, meetings, and communications with service providers.
- 4. Conduct Regular Plan Reviews: Evaluate investments, fees, and service providers against benchmarks, documenting the review process.
Best Practices for Managing Fiduciary Duties: Implementing best practices helps manage duties effectively and reduce risks:
- 1. Delegate Responsibilities Wisely: Consider delegating duties to qualified professionals while maintaining oversight.
- 2. Engage an Independent Retirement Plan Advisor: Collaborate with an advisor for guidance on investments, plan design, education, and monitoring.
- 3. Conduct Employee Education and Communication: Provide comprehensive retirement education, empowering employees to make informed decisions.
- 4. Periodically Benchmark Plan Fees: Evaluate fees and services, negotiate when appropriate, and ensure transparency.
Fulfilling fiduciary responsibilities is vital for a successful retirement plan. By educating yourself, creating an IPS, documenting processes, working with a retirement plan advisor, and implementing best practices, you can effectively manage duties and reduce risks. By acting in participants’ best interests, you contribute to their financial security and the success of the retirement plan. To learn more about how you can strengthen your fiduciary procedures, contact Innovative Investment Fiduciaries at resources@iifria.com or by calling (856)-242-3328.