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It’s Time for the 401k Plan Year-end Review

Published by Kim Moore on Nov 11, 2021 6:00:00 AM

The end of the year is rapidly approaching and before Plan Sponsors get tied up with other year-end and holiday tasks, we recommend a focus on a year-end review for your 401(k) Plan. As Plan Sponsors and more importantly Plan Administrators or Trustees, it is your responsibility to ensure the Plan is performing in compliance with all required regulations and is operating in the best interests of all participants. This is your fiduciary duty to the Plan. Make sure everything is in order with the Plan so you can start off 2022 confident the Plan is in good shape!

Below are items to consider in the year-end review:

  1. Fee Analysis.Let’s talk big picture- Calculating production metrics for your creative agency
    Include both the fees paid directly by the company and the fees passed along to the participants directly through the Plan. Ask your investment advisor how your fees compare the charges to other Plans – usually they can provide a benchmarking analysis that will help in this evaluation. It may be prudent to consider a change if you believe the fees are too high or seem unreasonable, discuss this with your service provider.

  2. Keep Plan amendments current?
    Because of the CARES Act and other regulatory changes, a Plan amendment may be necessary depending on which provisions you took advantage of during 2020. Discuss this with your service provider to ensure all necessary amendments have been processed. Ensure that you and the staff that work with the Plan administration on a day-to-day basis have a good understanding of all Plan provisions and seek clarity if needed.

  3. Plan participation review.
    If it's not up to snuff, consider adding some employee education about the plan. Add it to your annual benefit enrollment meetings or send out written communications to all employees. Offering a 401(k) Plan is a great benefit – don’t let your employees miss out.

  4. Investment Plan performance review.
    Seek assistance from your investment professional in this area. They should be able to review the performance of your offerings to similar investments. Then, consider making a change if needed based on your review.

  5. Review the performance of all service providers related to the Plan.
    Are your service providers responsive? Have they made a lot of mistakes? Now is the time to discuss making a change if you are not satisfied. Ask around – talk to those that work with the Plan and participants. If they have concerns make sure you investigate to avoid potential problems down the road.

  6. Evaluate Plan administrative procedures.
    Review contribution timeliness. Ensure that you are comfortable all duties are properly assigned with due dates. Review the compliance calendar for the upcoming year. Make sure any questions get answered and everyone is ready to tackle the year ahead for your Plan.
    Get a FREE 401k Audit Consultation
We at Summit CPA know that Plan administration can be a huge burden to companies especially with all the complexities added due to the pandemic. Don’t let your guard down, however, regarding your 401(k) Plan. It is an important responsibility of the Plan fiduciaries to ensure compliance at all times. A review of current compliance and administration now will help make the start of 2022 a little less stressful.

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