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Year-End Review of Your 401(k) Plan

Published by Kim Moore on Dec 24, 2020 6:00:00 AM

As we approach the end of 2020, now is a good time to do an overall review of your Company-sponsored 401(k) plan. It’s been a tough year for everyone, but as the Plan Sponsor of a retirement plan with a fiduciary duty to the plan, don’t pass over your responsibilities. Make sure everything is in order with the plan so you can start off 2021 confident the plan is in good shape!

Here are some items to consider in the year-end review:

  1. Analyze the fees charged. This should include both the fees paid directly by the Company and the fees passed along to the participants directly through the plan. Consider speaking with your investment advisor to compare the charges to other plans – single_binder_16374 (4)-1usually they can provide a benchmarking analysis that will help in this evaluation. If you believe the fees are too high or seem unreasonable, discuss with your service provider. It may be prudent to consider a change.

  2. Are your plan amendments current? Due to the CARES Act and other regulatory changes a plan amendment may be needed depending on which provisions you took advantage of during 2020. Discuss with your service provider to ensure all necessary amendments have been processed. Make sure you and the staff that work with the plan administration on a day-to-day basis have a good understanding of all Plan provision. Seek clarity if needed.

  3. Review plan participation. 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. The 401(k) plan offering is a great benefit – don’t let your employees miss out.

  4. Review plan investment performance. Again, seek assistance form your investment professional in this area. They should be able to review the performance of your offerings to similar investments. Consider making a change if needed based on your review.

  5. Discuss the performance of all service providers related to the plan. Are they responsive? Have they made a lot of mistakes? If you are not satisfied now is the time to discuss making a change. 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.

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. However, don’t let your guard down 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 2021 a little less stressful. For more information on how we can help, contact our office at (866) 497-9761.


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