A sound governance program should be put in place at the start of the plan and periodic reviews of the program should be completed to make sure that the plan stays on course. Plan sponsors have a fiduciary duty to act in the best interest of the plan participants. The regulatory bodies such as the IRS, US Department of Labor, the Pension Benefit Guaranty Corporation, FINRA, and the SEC all have jurisdiction over the administration of the retirement program.
Establishing the proper governance procedures is key to maintaining the qualified status of your plan and meeting the necessary requirements for disclosure and administration. The Department of Labor has an article on “Meeting Your Fiduciary Responsibilities” which lays out in pretty good terms, the roles and responsibilities of being a fiduciary of the plan. Recall that the money in the plan is held in a trust, and you may serve as the trustee. You are considered to be managing “Other People’s Money” even if most of it is yours or the company’s key individuals. You must act in the best interest of the plan participants.
As a plan sponsor, you must make required disclosure statements regarding the plan under penalty of perjury, so careful preparation and review of all the administrative details that go into preparing the disclosure documents is necessary.
At Edu4Retirement, Inc. we assist you in establishing and maintaining a good governance process. For our defined contribution plans, we prepare Quarterly Fiduciary Reports to review the funds within the plan.