We all know the saying Knowledge is Power. This quote hits the mark when it comes to retirement plans – for both the participant and plan sponsor. Being equally important, I will discuss what you should know about your plan from both perspectives.

Plan Sponsor:  Oftentimes the business owner decides the plan provisions, but it’s the day-to-day person who is in the plan on a regular basis. They need to be super familiar with the provisions (rules) of the plan. To know what the plan can do and what the plan can’t do will set your plan up for stress-free administration and no messy corrections.

1. Understand plan provisions. What is your eligibility period? Does the plan distinguish between deferral eligibility and employer contribution eligibility? Is there a match? If so, what kind? Does the plan offer loans or hardships? Is the plan part of a controlled group? There are over 30 various plan provisions a plan could offer from eligibility (when do you want someone to enter the plan) to the timing of a participant’s distribution (immediately after termination or the year following termination). You don’t have to be an expert, but knowing the gist of the plan high level will enable you to educate others in your organization. 

2. Set internal processes. Offering a retirement plan for the first time is a major task for any organization. Who will be responsible for notifying participants of open enrollment? Who will upload contributions to the trust? Will there be investment committee meetings? Who will keep track of hire dates, termination dates and rehire dates? What is your process to have the dates reported to the Third Party Administrator (TPA) or the recordkeeper? There are several processes that can be implemented and exercised for the overall wellness of your plan. 

3. Deliver accurate census data. Delivering accurate information to the TPA is critical. A missed termination date may result in an inactive participant receiving a contribution. Overstated compensation may result in a participant receiving a greater benefit than necessary. Other nuggets of census data that are also important include identifying family members (spouse, children and parents), new ownership, change in a relationship with a CPA or advisor, etc. We are seeing a trend where smaller firms are being acquired by other companies. Reporting accurate data will keep you in good graces. 

4. Clear communication with your TPA. There is no such thing as oversharing information with your TPA. I promise sharing is caring. Things that you may not think of as relevant may have serious implications for your plan. 

5. Value the TPA relationship. Leveraging your TPA partners is key. Having a good TPA on your team will keep the plan compliant, help the plan run like a well-oiled machine and make sure your plan design remains aligned with the company objectives. It’s a win-win. TPAs take their role very seriously. And some of us take our role one-step further by making it personal. Client service is our top priority. We are in the business to help business owners and participants save for retirement. The best plan sponsor is one that is going to take their retirement plan as serious as we do.

Plan Participant:  Plan sponsors are required to furnish plan participants with specific documents throughout your employment. Documents may include:

Information about your 401(k) plan prior to enrollment:

1. Automatic Enrollment Notice
2. Enrollment Book (may discuss plan provisions and investment related information)
3. Summary Plan Description (within 90 days of becoming a participant)
4. Login instructions to have online access to your account (applicable if your plan is self-directed)

Information about your 401(k) plan that you may receive annually:

5. Safe Harbor Notice (if your plan has a safe harbor component)
6. Quarterly participant statement (applicable if your plan is self-directed)
7. Summary Annual Report

A few other notables for plan participants:

• Read the Summary Plan Description. It is formatted in a Q&A format that is easy to understand.
• If you are a plan participant and question your benefit statement, contact your plan administrator or the human resources department.
• If you have a life status change (married, divorced), please update your beneficiary designation.
• Keep your plan documents handy in case questions arise in the future
• You will see any fees that you are paying as a participant itemized on your quarterly statement and annual 404(a)(5) notice which is the participant fee disclosure.
• If you take a 401(k) plan loan and do not see payments deducted from your paycheck, contact your plan administrator immediately. This oversight may result in refinancing your loan while keeping the original maturity date (which means your monthly payment will go up).

If you are a plan sponsor and looking for a new TPA partner, ACG may be a good fit. Please reach out today.