Reviewing Retirement Plans

by Niki Stehlik

Many business owners do not realize the importance of reviewing their employee retirement plan annually to reduce any risk of errors, misunderstandings, or breach of fiduciary duty. Below are a few items to consider when performing a review of your business’s employee retirement plan.


Review your plan documents

The business owner should be familiar with the provisions of their plan and should ensure that the plan is updated when necessary for both mandatory and discretionary revisions.  Items to be familiar with may include provisions related to the definition of compensation, participant eligibility requirements for different purposes, distribution options, or vesting provisions.  Having a clear understanding of these provisions can help ensure effective administration of the plan.


What to scrutinize in a review

A review provides the opportunity to evaluate investment performance, reasonableness of fees, and accuracy of compensation calculations and employee data.  This can be a great deal of work, but business owners may employ the services of professionals to assist with the administration and maintenance of their plan.  However, it is important to understand the roles and responsibilities of all involved including the role of the owners themselves to prevent any potential liability.


Understand fiduciary duties

The first step in understanding your fiduciary duties is identifying plan fiduciaries and their responsibilities.  The U.S. Department of Labor (DOL) simplifies this in its publication Meeting Your Fiduciary Responsibilities.


Employee’s Review of Plan Information

Although the employer has a responsibility to review the employee retirement plan, employers should encourage employees to also review their plans annually.  Items they should consider when reviewing their plan include investment choices and performance, contact information, birthdate, hire date, marital status, and beneficiaries.  This will allow them an opportunity to inform the employer of any updates that may need to be made.


Communicating Plan Modifications

To assist employees in their review of their retirement plans, having the most recent Summary Plan Description (SPD) may be helpful.  When modifications are made to the plan, the SPD must be updated and employees must be made aware of the update.  The updated SPD must be provided to plan participants no more than 210 days after the end of the plan year the change was made.


Reviewing a retirement plans can be a large task.  Please consider meeting with an advisor to assist in the review process and to gain an understanding of the different aspects involved. If we can be of assistance, please contact HBE to set up a consultation.

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