Sonny Curtis and the Crickets weren’t wrong when they first recorded these words in the 50’s and these lyrics have and will ring true forever. You know when you drive with a broken tail light, an expired inspection sticker and/or too many miles with the gas light screaming at you from the dashboard; yes you do. You may not get a ticket for running out of gas, but if you do, and John Q Law decides to stop and try to help, he might notice the tail light problem, he could take an inadvertent glance at the overdue inspection sticker on the windshield.

Don’t run out of gas with your 401(k) plan, check under the hood and make sure your employees are treated appropriately under the law. Check the tire pressure on your fidelity bond and pull the dip stick on the plan expenses. The check list below should be a yearly priority in order to be ready when the man/woman with the badge pulls you over.

Please take a second to review these items and contact me if you’d like a complimentary audit of your plan. Stay tuned for next week’s dip of “Is your 401(k) in Good Order?”

Fiduciary Check List

There is a great deal involved with meeting your fiduciary responsibilities. To see if you’re on the right track, review the checklist below.

  • Have you identified your plan’s fiduciaries and are they clear about their fiduciary responsibilities?
  • Have you developed an Investment Policy Statement?
  • Do you offer an investment line-up that complies with ERISA section 404(c) and meet the other regulations?
  • Have you completed all necessary government filings, such as Form 5500?
  • Have you distributed the Summary Annual Report to all participants?
  • Have you provided sufficient information so a plan participant can make informed investment decisions
  • Are you aware of the schedule to deposit participants’ contributions in the plan and have you made sure it complies with the law?
  • If you are hiring third-party service providers, have you looked at a number of providers, given each potential provider the same information and considered whether the fees are reasonable for the services they provide?
  • Are you monitoring your plan’s service providers?
  • Are you reviewing plan fees and expenses so they continue to be reasonable in light of the services provided?
  • Have you distributed the required participant fee disclosure to all participants?
  • Have you identified your plan’s fiduciaries and are they clear about their fiduciary responsibilities?
  • Are you aware of the major exemptions under ERISA that permit transactions with parties-in-interest, especially those key for plan operations (e.g., making plan loans to participants)?
  • Have you reviewed your plan document in light of current plan operations and made necessary updates? After amending the plan, have you provided participants with an updated SPD or SMM?
  • Do those individuals handling plan funds or other plan property have a fidelity bond as required under ERISA?
  • Have you considered optional fiduciary liability insurance, which covers fiduciary breach claims and helps protect the personal assets of plan fiduciaries? (Fiduciary liability insurance may be purchased as a rider to officer’s and director’s coverage or as a stand-alone policy.)

See you next week.

Michael Mandel

Check list provided by ADP Retirement Services, 71 Hanover Road, Florham Park, New Jersey 07932

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.