"In a world where change is a constant, it’s important to retain vigilance over your defined contribution (DC) plans. However strong your governance structure is, all plans need to evolve with changes in legislation, regulations, industry trends and the changing needs of individuals. What may have been ideal three or five years ago may not be as ideal today..."
Should You Delegate Your Responsibilities?
Managing a 401(k) plan continues to get more challenging — even more so for small and midsize employers. From determining investment appropriateness, to plan design changes and fees, to managing multiple vendors, sponsors should stop and ask themselves these three questions:
- Which fiduciary and plan administration responsibilities, if any, do I need to keep?
- Which fiduciary responsibilities and plan administration should I delegate to third party?
- Should I delegate these responsibilities to different third parties or can I delegate to just one?
Putting Your Focus on the Right Things
Delegating fiduciary and plan administration responsibility a to a third-party can make sense when resources, time, and legal concerns take staff away from other important work that support and enhance your organization.
To see if you and your plan participants would be better served if someone else acted as named fiduciary and plan administrator under ERISA ask your team if they would save time and resources if a third-party:
- Prepared, signed, and filed your 5500/8955 SSA
- Conducted your compliance testing and oversaw the accuracy of your plan records
- Oversaw contributions/distributions, including all required notices
- Monitored eligibility determination
- Approved plan transactions
- Resolved questions of plan interpretation and any queries or complaints
- Oversaw and managed DC plan investments
- Oversaw and managed service providers
If you’ve answered “YES” to all or a majority of these questions, delegating fiduciary responsibility and plan administration may be a great next step for your plan.
Interestingly, when looking for a vendor you don’t actually have to pick and choose from the items listed above. Mercer has rolled them all into a single, comprehensive, and cost-effective solution for small and midsized plan sponsors. It’s called Mercer Wise 401(k)SM. Learn more today!