Module 11: Retirement Plan Governance and Administration

Comprehensive vocabulary flashcards focusing on fiduciary committees, plan documentation, service provider relations, and regulatory compliance policies for retirement plan administration.

Composition and role of retirement plan committee

$3\text{-}5$ senior leaders in company responsible for oversight of plan & hiring service providers

Relationship of retirement plan committee with service providers

Delegates responsibility for administration of plan

Fidelity bond

Required to cover at least $10\%$ of plan assets in case of loss due to criminal acts or embezzlement by plan fiduciaries/other plan officials

Process for amending a plan document

Changes due to new legal requirements that alter the operation of the plan; amendments must be drafted, reviewed, implemented, and communicated

Plan document

Formal, legal document that must be formally amended & conforms with IRS and DOL requirements

Policies and procedures

Guide daily operations of plan, and can be more flexible than the plan document

Effect on plan sponsor liability with use of service providers

Plan sponsor retains legal responsibility for plan administration

Sub-regulatory guidance

The DOL cited under ERISA, fiduciaries must take precautions to mitigate risks of malfeasance to their plans, whether cyber or otherwise

DC fees a fiduciary issue

If charged to participant accounts, then plan fees are a fiduciary issue

Collective investment funds

Trust fund managed by bank/trust company that pools assets of several plans

Soft-dollar arrangements

Occur when the standard fee charged for a service is greater than the actual cost, where the difference can be used to pay for other services

Sub-transfer agent fees

Fees charged within a mutual fund that are then paid by mutual fund to recordkeepers

Issues for consideration in mergers and acquisition

Decision of whether to combine $2$ plans or maintain separate plans

Relevant time horizon for the plan document amendment process

The effective date for any required change because of new legislation is the start of the following plan year after the legislation is passed by Congress

Issues for inclusion in investment policies where participants direct investments

Selection criteria for managers/mutual funds; performance benchmarks; process and criteria to change a fund offering; frequency at which investments are reviewed; how fees are paid; # of fund options permitted; range of options allowed; default option; restrictions

Issues for inclusion in investment policies where participants don’t direct investments

Targeted asset allocation and frequency of rebalancing

Issues for inclusion in loan policies

Plan limits; guidance regarding how certain events will be handled; required time before repayment of a loan and issuance of a new one

Issues for inclusion in hardship distribution policies

Frequency distributions are processed; minimum loan amount requirement; proof to establish hardship; other sources of funds that must be used before applying

Distinction in items contained in a plan document versus a policy document

The controlling instrument vs. day-to-day functions and elements that may change over time

External service provider

Recordkeeper, investment manager, and/or corporate trustee

Tips for Hiring a Service Provider with Strong Cybersecurity Practices

Suggestions for an employer to prudently select & monitor a vendor, considering security standards, business practices, SOPs, & the right to review audit results

Cybersecurity Program Best Practices

A framework for crafting a comprehensive cybersecurity program conforming to essential best practices

Online Security Tips

Targets participants and beneficiaries who utilize online tools to access their retirement accounts

Mutual fund fees

Sales charges; management fees; other fees; Rule $12\text{-b}1$ fees