One thing that concerns me most when I do a plan audit is the liability of the plan sponsor. So, in the next few posts, you’ll get information about how to reduce your exposure and liability with plan participants, the Department of Labor and the IRS. The first step is to take a look at the way the plan is structured – whether it’s brand new or has been in place for years.
- Make sure that your plan is designed to fit your business and retirement planning needs – Do eligibility and contributions (employee and company) fit the retirement needs of your employees? If your company is growing (or shrinking), then your liability may vary based on your number of employees.
- Hire professionals – The Department of Labor (DoL) and IRS rules regarding benefit plans are complex and continually evolving. It is realistic and prudent to outsource all or part of the plan investment recommendations, documentation and administration. The professionals you need may be brokers, ERISA attorneys, Third Party Administrators or CPAs.
- Check references – Regardless of who recommends the professional(s) you need, be sure to check their references and track record. Talk with more than one professional firm to understand the best fit for your company.
- Purchase an ERISA bond and/or fiduciary liability insurance – Per the DoL, bonding is mandatory and protects your plan assets from unscrupulous investment decisions. The liability insurance will protect you from personal liability with plan participants and other litigious parties.
Next step: Plan maintenance