(b)lines Ask the Experts – Resolutions for 403(b) Plan Sponsors

December 31, 2013 (PLANSPONSOR (b)lines) – “Any New Year’s Resolutions from the Experts?”

Michael A. Webb, Vice President, Retirement Plan Services, Cammack LaRhette Consulting, answers:

The Experts have plenty of New Year’s resolutions, but many have little to do with retirement plans! But seriously, assuming you are referring to New Year’s resolutions for retirement plan sponsors, yes , the Experts have a few suggestions.

Perform a retirement plan self-audit – In other words, conduct a comprehensive review of all plan compliance issues as if the Department of Labor (DOL) or Internal Revenue Service (IRS) were auditing the plan. Though the DOL has no audit guidelines for 403(b) plans, and the IRS has yet to update their audit guidelines for the final 403(b) regulations, there is still plenty of material that can serve as a good starting point for any self-audit, such as the IRS 403(b) Plan Checklist and the DOL Reporting and Coverage for 403(b) Plans page. If you sponsor a plan or plans other than a 403(b), there are similar resources for other plan types. In addition, benefits counsel can serve as an excellent resource in this area.

Ensure your value equation with your recordkeeper(s) remains reasonable – There has been increased DOL focus on plan fees, and the fees paid to your plan’s recordkeeper represent the bulk of these fees. Thus it is important that you evaluate those fees on an annual basis, benchmarking them against peer plans to make certain they remain competitive. But don’t just benchmark fees: comparing plans in your industry that are of similar size will not mean much if you have a complex multiple-vendor/plan design and a  peer institution  has just one single-provider plan that is far less difficult (and costly) to administer. If you determine your value equation (fees and services) could be better, negotiate with your recordkeeper(s) or conduct a Request for Proposal.

Figure out how to effectively communicate with your participants, and communicate with them! – This may seem obvious, but most communication campaigns are ignored by most participants who are too busy, too disinterested, or both. Thus, time and effort should be spent by plan sponsors figuring out what works to engage their participants and what doesn’t BEFORE any retirement plan communication campaigns are launched; otherwise, those state-of-the-art communications that your recordkeeper can provide will be of limited value. For example, participants who may never attend a group meeting will certainly meet with their managers, so perhaps working with managers to communicate the importance of retirement plan participation in their one-on-one interaction with their employees would be a method of engaging such participants. However, this is but one of many possible examples; what works for a particular plan sponsor is often a matter of trial and error. And, if in the end, your trial and error is mostly error, automated retirement solutions, such as auto-enrollment and auto-escalation, should be considered.

Thanks for the question, and, with this being the last Q&A of 2013, the Experts would like to take this opportunity to wish everyone a happy and healthy 2014!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.