Annual Plan Reviews

Annual Plan Reviews Annual Plan Reviews are imperative for any employer who is administering a retirement plan.  It is a fiduciary’s responsibility to annually review various aspects of the plan to so that you can document how well the plan is being managed in accordance with regulations and guidelines, and determining whether the plan’s funds are meeting the performance criteria of the company’s Investment Policy Statement (IPS). Additionally, it’s important to have an annual review for financial planning so that fiduciaries can periodically evaluate fee disclosures for reasonableness. Plan administrators need to assure employees that they are reviewing and monitoring plan processes closely to maximize and protect their benefits. These reviews should be conducted with investment advisors, plan custodians/trustees, and a third party administrator at least once a year, if not more. To the greatest extent possible, The Ryding Company likes to participate in the annual plan reviews offered by your Financial Advisor. It’s a good time to review the plan document provisions, make important changes and verify compliance with the ever-changing laws from the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act (ERISA), as well as address any ongoing questions or concerns.  By focusing on the plan’s investments, administration, compliance, and communications, the plan administrators will be able to determine where any weaknesses lie and take steps to correct them. The review process should first review the plan’s overall mission, and its goals and objectives.  A good review will not only review the plan objectives and goals but also conduct strategy analysis.  Fiduciaries should take a look at the operational aspects of a retirement plan, like eligibility, employer/employee contributions, and eligible compensation for different contributions, fee schedules, and ongoing plan performance, along with vesting as well as distributions. We can assist with helping employers use these various checklists, and provide you with other tools and resources.  Did you know that The Internal Revenue Service (IRS) also has many checklists available for various plan types?  These checklists allow plan administrators to perform quick reviews for operational compliance. When using these checklists, they may not cover all plan requirements, but they will provide you with a fast and quick method of beginning your retirement plan checkup.

Bring a Full Team to the Plan Review Table

Don’t forget to invite Julie Tucker to your Annual Plan Review! As the financial advisor, you can focus on investments, and Julie will highlight plan design and compliance. Leaving the technical jargon at the office, she’ll perform a forensic deep-dive into the history of the plan and proactively address operational trends that may impact the plan design. Whether we recommend a change in design or confirm that the existing design continues to meet the needs of the plan sponsor, the feedback we’ve received from financial advisors and clients alike is that her presence adds considerable value to the conversation. Contact Julie in the early planning stages so that she can place your preferred times/dates on hold until a final meeting date is locked in. This service is primarily suited to plan sponsors who have employees and sponsor 401(k) Profit Sharing or 403(b) plans.

Some important questions to ask during an annual review

  1. Has the plan document has been updated within the past few years?
  2. Has the plan identified all eligible employees and are participants receiving their contributions as specified in the plan?
  3. Has the plan successfully deposited contributions in the respective employees’ accounts on a timely basis?
  4. Are the plan’s elective deferrals limited to amounts allowable under the Internal Revenue Code for the calendar year?
  5. Have we given out the required information to all of the plan employees?
  6. Have we deposited employee deferrals and contributions on time?
  7. Are we following the terms of the plan documents?
  8. Have we limited employee deferrals and employer contributions as per the limits of the plan?
Once you have reviewed your plan thoroughly if you find that you have identified any mistakes or issues, don’t panic!  Mistakes happen!  We can assist you with addressing many plan errors, and the IRS and US Department of Labor (DOL) have established programs to assist with fixing these errors, sometimes without penalties or for reduced penalties and fees, for eligible plan sponsors. It’s also important to monitor and maintain your retirement plan and to set up an operational guide for how this can be achieved throughout the year.  This includes reporting to the federal government, staying current on regulations and changes, and conducting regular meetings to review investment results along with operating procedures and internal controls. Let us provide you with assistance and our insight on how to identify and correct common mistakes in your plan’s annual review.