Critical questions for plan sponsors: Do you have written record of the plan minutes and documents?

Fort Pitt Capital Group in 401(k) 15 August, 2016

Written records of retirement plan minutes and documents are essential because if something is not in the file, then technically it didn’t happen. So, if the IRS or the Department of Labor comes knocking at a business and asks about the plan, or why the retirement plan committee has made certain decisions, plan minutes are one of the items they want to see. These agencies make sure that a prudent decision-making process is being followed when it comes to a retirement plan, and the only way to prove that is by documentation. Additionally, written record of the rationale behind decisions creates an institutional memory. As different people roll in and out of the committee, they have the ability to read the plan minutes to understand how the plan has historically run.

As the committee is getting ready for each meeting, they can look at the last meetings’ minutes and recall what was discussed. The retirement plan is not part of the day-to-day responsibilities for most committee members, so having records of previous meetings recaps what occurred.

The plan committee can designate a “secretary” to take notes at the meeting and type up minutes. It’s advised that before each subsequent meeting, each member reviews the minutes and approves them. At the following meeting, the approval of the previous meeting should be noted in current minutes, indicating that everyone agrees on the accuracy as part of the official record.

If a plan sponsor is ever accused of breach of fiduciary duty, and there’s no written proof of the process or rationale behind a decision, they have no way of defending the decisions made and could potentially face fines.

Join Our Newsletter

Receive updates from our blog, retirement plan industry events & news, media appearances, and the latest on Fort Pitt events.