When you are new to managing your company's 401(k), it can be tough to find a square one. So, where do you start? First, you need to understand your role, others' roles and document who is and is a fiduciary on the plan.
As a kid, in our neighborhood, we had a father and sons campout every year. When I was about 8, I decided not to go because I was afraid of driving through the canyons. I was tall enough to see through the window, but I wasn't tall enough to see the road. So, I didn't know how close to the edge we were driving. I felt like, at any given second, we could be flying off the road to our deaths.
Because I work in the employer-sponsored retirement plans space, I talk to many plan sponsors and plan administrators who have a similar fear regarding their 401(k). They may be able to see out the window, but they don't know how far away they are from the edge of the cliff.
In my experience, many people who are managing their company's 401(k) plan haven't gone through any formal training. So, they are relying on the professionals around them to stay away from the edge of the cliff. These plan sponsors and plan administrators don't want to get in trouble with the DOL just because they didn't know what they didn't know, and they were just too close to the edge.
If you don't want your plan to be keeping you up at night because of the fiduciary duties you have, where do you start? To understand the first step, let's talk about sports.
If you are playing a football game, how are you supposed to play if you don't know who's passing, who's blocking, and who is receiving the ball? You've got to see the role everyone plays in managing the 401(k) plan. You need to know your part and the positions of those around you in managing the 401(k) plan. Who likes to find out after a problem has occurred they were responsible for overseeing it in the first place? So, step one has to be figuring out who is a fiduciary and who is not. You have to figure out what the responsibilities are of those around you as well as your own.
Once everyone is aware of their place on the team and acknowledges their responsibilities, it i's time to document. Who knows if and when you will be moving on to another position in your company. Who knows if and when you will be moving to another company or if the DOL audits you. But if and when things happen, it's good to know you have documentation of roles and responsibilities and the reasons for the decisions you make in a centralized place.
I hope this was helpful. We have other valuable content on our website at www.cuiwm.com and a podcast, "In Your Business," with Michael Sayre. You can also look for us on social media, Twitter, Facebook, and LinkedIn. If you want to hear more of this or be informed next time we get more content like this, please subscribe.