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Step 2: Plan Maintenance

The second installment in my series about reducing plan sponsor liability is plan maintenance.

After you review and feel confident about your plan’s structure, it’s time to consider plan maintenance. Here are ways to stay on top of your plan and prevent liability issues for yourself and your company:

  • Be sure that your investment policy statement is up to date – Department of Labor audits usually request a copy of your investment policy to track consistency with investment vehicles.
  • Monitor plan investments consistently – Economic, political and international issues all have an impact on the performance of investments. In addition, investment company and advisor changes demand that you understand the state of your plan’s investment vehicles. Be sure that your investment broker remains current on investment status and match with your investment policy statement.
  • Beware of nepotism – If you hire a family member to manage your investments, compare performance and fees to other investment advisors to maintain propriety for your employees, the DoL and the IRS.
  • Know your expense ratios – While the expense ratios of mutual funds are often complicated, a great deal of attention is being paid to the fees associated with benefit plans. Understanding all fees will keep you in the clear, as well as better financially managed.

Next step: Understanding fees