401k Decision-Making And Documentation Best Practices

Facebooktwittergoogle_plusredditpinterestlinkedinmail


PSI Newsletter and Website Header 10.2.15
By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Are you making retirement plan decisions using a prudent process? Do you always put the interests of plan participants ahead of the company’s when considering plan issues? Following are some decision-making best practices and documentation best practices.

Decision-making best practices

  • Form an Investment Committee to make decisions about plan issues. It is best if your Investment Committee has an odd number of members to avoid tie votes.
  • Use consultants and existing providers to help you develop prudent policies and procedures for running your plan.
  • Working with an attorney or your recordkeeper, make sure your plan documents are up-to-date. You must always comply with all plan documents. Many times plan document language and provisions will channel your decision-making process.
  • The most important of all decision-making best practices is to remember to put the interests of plan participants first when making decisions, ahead of your personal interests and those of the company.
  • For every decision made, document your process and place the notes in the plan file. Every time you meet to discuss the plan, take minutes and make sure to file them. Finally, always file a copy of every employee plan communication.
  • Each year review all participant plan forms to make sure they are up-to-date.

And you should also consider…

  • No gray areas. You are either in compliance or not. Following your plan documents or ignoring them. You cannot pick and choose which plan provisions to follow and which to ignore. Not following your plan documents can result in fiduciary breaches and personal liability.
  • Documentation is key. One of the decision-making best practices that is also a documentation best practice is to document the process you used to arrive at a decision. Think you are following prudent processes when making decisions? There is no way to know when looking back at prior decisions unless you documented it.

Not following prudent decision-making processes and procedures can result in plan disqualification, fiduciary breaches, lawsuits and personal liability. Make sure you let prudent policies and procedures guide your decision-making on retirement plan issues.

________________

About the Author
Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton has over 30 years of retirement plan consulting and administration experience and has provided consulting services to many Fortune 500 companies including: Aon Hewitt, Apple Inc., AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Car Company, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs and many others. Mr. Lawton may be contacted at (414) 828-4015 or bob@lawtonrpc.com.

About Lawton Retirement Plan Consultants, LLC
Lawton Retirement Plan Consultants, LLC is a Milwaukee, Wisconsin-based independent, objective Registered Investment Advisory (RIA) firm providing investment advisory, fiduciary compliance, employee education, vendor management and plan design services to 401(k) plan sponsors. The firm currently has contracts in place to provide consulting services on more than $400 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or bob@lawtonrpc.com or visit the firm’s website at: http://www.lawtonrpc.com. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures
This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.