Is Your 401(k) Plan on Course? Follow this Checklist

Estimated reading time: 5 minutes

Keeping your 401(k) plan on course requires vigilance, and a good plan sponsor navigates more than just the investment climate and daily maintenance of the plan. Tracking a 401(k) plan includes thorough reviews throughout the year, with employers focused on fees and performance, compliance, and participant communication. Here is a concise checklist to keep your 401(k) plan on course.

401(k) plan checklist

Fees and Performance

Routine reviews offer an opportunity to monitor fees and expenses related to the 401(k) plan, as well as identifying new features that may be incorporated into the plan. When examining the performance and fees of the plan:

  1. Consider the purpose and goals of the 401(k) plan

An assessment of the plan’s objectives is important to recognize whether the plan is meeting those goals for the sponsor and the participants. Achieving the objectives may include:

  • Determining if the original purpose of the plan remains relevant. If priorities have changed, the plan’s design may need to be revised
  • Measuring the success of the plan by setting specific goals and reviewing results, such as improving certain internal processes
  • Gathering feedback from participants through surveys and focus groups
  1. Review service provider fee disclosure requirements (and expense monitoring)

Monitoring expenses is one of the many duties of a plan sponsor and your review of provider’s service fees should include:

  • Reading their disclosures
  • Comparing fees to similar plans through a bench-marking study provided by a trusted consultant
  • Being prepared to explain the expenses paid and why they are reasonable and suitable options for your plan participants
  • Discussing concerns with service providers
  1. Review required participant fee disclosure regulations

Sponsors are responsible for reading and evaluating the materials the plan providers send to participants. As you review the information, consider:

  • Are the fees reasonable?
  • Is all of the required information included in the disclosure?
  • Can participants easily understand the information?
  • Are there other ways to present the information that would make statements more useful?
  1. Revisit plan administrative procedures and implement best practices

An administrative manual provides an organized method of documenting specific processes and procedures for administering the 401(k) plan. The contents can include:

  • Procedures for reconciling plan contributions
  • Details for calculating employer contributions
  • Process for funding contributions
  • Explanation of services provided by various providers, such as nondiscrimination testing, Form 5500 preparation, or plan document maintenance
  • A list of decisions made related to the interpretation of the plan document


With the assistance of your legal counsel and 401(k) service provider, you can ensure your plan complies with federal regulations by:

  1. Conducting a compliance review to identify potential issues

Compliance reviews can uncover issues and administrative gaps, including:

  • Services that should be provided but are currently not being performed
  • Changes in ownership, acquisitions or mergers
  • Changes to the plan’s controlled group status
  • Nondiscrimination tests and who performs the testing
  1. Assessing plan documents to ensure the plan complies with current regulations

Key reasons for this review include:

  • Ensuring the tax-qualified status of the 401(k) plan, which could be at risk if the plan document does not comply with current regulations
  • Conducting a document review annually also helps confirm restatement cycles are met and various administrative procedures are being performed as outlined in the plan document
  • Determining that all safe harbor requirements are met each plan year (for safe harbor plan designs)
  • Updating the plan’s summary plan description (SPD), if necessary. The SPD should be updated once every five years if the plan has been amended within the five-year period, and every 10 years if the plan has not been amended
  1. Confirming that your plan’s fiduciaries understand their responsibilities

The plan sponsor must know – and document – those who are considered fiduciaries for the plan. The fiduciaries should:

  • Receive appropriate training for their role and how to document the duties they perform
  • Adhere to the U.S. Department of Labor’s (DOL’s) fiduciary regulations
  1. Staying alert to legislative changes that may affect the 401(k)

Changes in legislation and regulations may affect your plan. Consider these methods for keeping abreast of updates and revisions:

  • Request that your 401(k) provider shares updates promptly
  • Assign an internal team to track legislation and guidance on existing regulations
  • Set action plans with your legal counsel and 401(k) provider for implementing changes that occur
  • Subscribe and review publications offered by professional organizations such as Findley


A myriad of communications is required to meet fiduciary obligations each year. Fee disclosures, safe harbor notices, automatic enrollment notices and summary annual reports are just a few of the communication requirements. Additional communications may be needed to promote features of the plan or changes to the plan. Your review of the communications should include:

  1. Evaluating the plan’s required communications to determine if they meet fiduciary obligations by:
  • Creating a list of the notices that are required, delivery options and the timing for each
  • Reviewing each communication piece for accuracy and readability
  1. Developing new communications for the plan to:
  • Target messages to groups of participants based on age, contributions rate, employment classification, compensation or other factors that affect participant behavior
  • Promote the idea of preparing for retirement through communication and education about saving and investment
  • Expand the ways messages are delivered by introducing smartphone applications and interactive websites

Questions regarding this checklist and your 401(k) plan? Contact Lauren Schlueter in the below form.

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Scared vs. Prepared: Conducting an Operational Compliance Review

Well, it arrived.  On your desk is a white envelope with a return address to the Federal Government. Are you prepared for this day?  Are your procedures up-to-date? 

Fortune Favors the Prepared

No one likes finding out that they are being audited by the Internal Revenue Service (IRS) or Department of Labor (DOL). But the fact of the matter is that all qualified retirement plans (defined benefit and defined contribution) may be audited. Prudent plan sponsors are proactive, have up-to-date procedures and guidelines, and periodically conduct an operational compliance review, or self-audit. Taking the initiative to do a self-review can help you avoid added costs and liabilities down the road.

Plan sponsors have a fiduciary responsibility to ensure their plans are operating according to the law and governing plan documents. This includes everything from documentation, to benefit calculations, to the day-to-day administrative processes. No matter what type of retirement plan you have, or whether it is administered in-house or outsourced to a professional recordkeeper, you should consider conducting an operational compliance review every few years.

Bonus: It’s also the perfect time for plan sponsors to locate and organize all plan documents, Summary Plan Descriptions, administrative manuals, third-party service agreements, and meeting minutes.

A particularly good time to conduct a review is when a merger or acquisition takes place. If you are considering merging one plan into another, it is beneficial to correct errors in each plan before merging. Once the plans are merged, it is harder to isolate when and where the problem started and to calculate any corrections needed.

Start to finish, a self-audit can last from six weeks to six months depending on the size of the plan, depth of review, and findings. The review may be broad, focusing primarily on plan documents, annual filings, and compliance testing. It may be very detailed, structured to encompass everything from internal payroll processes down to spot checking select records or transactions from the recordkeeping system.

How Do We Make Sure We’re Prepared?

When considering an operational compliance plan review, it’s tempting to think, “Nothing has changed with our plan, so we’re good.” However, just because your plan hasn’t changed in your eyes doesn’t mean you shouldn’t review. New tax laws, legislative updates, and organizational restructure all affect retirement plans. Use these eight questions to help you pinpoint areas that may need to be addressed in your review:

  • How long ago was the last internal review completed?
  • Are there any recent laws or regulation changes affecting your plan, your company, and your employees?
  • Does your plan document reflect the way the plan is currently being administered?
  • When was the last time your benefits and payroll teams reviewed the wage types to confirm that they align with the plan document?
  • Is there a committee that meets to discuss and make decisions regarding the retirement plan?
  • Are the retirement plan committee decisions documented in meeting minutes?
  • Have there been tax laws or internal company changes which may impact the plan’s operation?
  • Has your company made any acquisitions or changes in payroll systems?

Where Is the Most Exposure?

The DOL and IRS periodically publish lists of the most common compliance issues they find when reviewing retirement plans. The most common issues include:

  • Definition of compensation
  • Updates to the plan documents for tax law changes
  • Employee eligibility
  • Loans
  • In-service distributions
  • Minimum required distributions
  • Nondiscrimination testing
  • Vesting
  • Timing of payroll deposits
  • IRC 410(b) coverage testing
  • Qualified domestic relations orders
  • Target date funds
  • Revenue Sharing and 12b-1 fees
  • Plan committee meetings
  • Blackout participant notices

This list is not exhaustive; however, it is a good reference and cheat sheet for areas of focus for your plan review. Most recently, the DOL has been focused on the diligence of plan sponsors in locating missing participants.

In Perspective

The day that letter arrives doesn’t have to be scary.  Performing an operational compliance plan review every few years can keep your plan up-to-date and compliant. Questions? If you would like to learn more about conducting an operational compliance review of your plan, please contact the Findley consultant you normally work with, or contact Amy Kennedy at, 419.327.4102, or Beth Mattimoe at , 419.327-4416.

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Posted March 6, 2019