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New Year’s Resolutions for Plan Sponsors

With the New Year just around the corner, many of us will be considering New Year’s resolutions. Milliman has compiled a list of 10 ideas plan sponsors can adopt in order to improve their retirement plans — and perhaps make it a bit easier on their pension professionals as well:

1. Create administrative procedures and internal controls — and follow them. From a specific listing of what each party does in relation to the retirement plan to preventative (front end) and detective (after the fact) procedures, Milliman says that most auditors would agree that plans with better internal controls tend to have better administration. 

2. Make sure changes to your operating procedures are well documented. There are often operational procedures that are not hard coded into plan documents (and plan documents aren’t always kept up to date).

3. Audit your data. The data provided to service providers drives their ability to determine eligibility, vesting, contribution calculations, discrimination testing, 5500 reporting, etc., and in return feed that data back for administration. Garbage in, garbage out — and corrections can be costly.

4. Transmit contributions in a timely manner. The DOL established a seven-business-day safe harbor for plans with fewer than 100 participants for prompt contributions. Plans with 100 or more participants are expected to remit contributions on a common cycle and within a consistent time period. Once an earliest deposit date is established, you are expected to keep it. The traditional rule of 15 business days following the end of the month no longer applies. 

5. Establish a Retirement Committee. Milliman notes that, whatever the original purpose in sponsoring a plan, it’s important to have clear, measurable goals for the plan.  

6. Understand plan fees. And regularly evaluate and benchmark whether the fees the plan pays are reasonable. 

7. Audit your service providers. Schedule time to evaluate whether service providers are providing the services they agreed to and charging the fees that were agreed upon. 

8. Conduct an annual plan review. Having established a retirement committee and set goals for the plan, it’s important to evaluate how your plan is performing. 

9. Establish success measures. Identify success measures that you can monitor and track from year to year in your annual review.

10. Establish a strategy for the upcoming year. Once the plan’s performance is reviewed, develop a strategy to improve those outcomes, and work with your service providers to achieve those new goals.