Summary of 401(k) Committee Roles

I. Selection
Select appropriate investment options with 404(c) and your company’s demographics in mind.

II. Investment Policy/Fund Performance Monitoring
Evaluate fund performance. What criteria will be used to assess the performance? At least annually, you’ll want to evaluate the one (1) year, three (3) year, five (5) year, and ten (10) year returns as compared to an appropriate benchmark. You may want to review each fund within its competitive universe. An investment policy should be established.

III. Participant Communications
Your company needs to make a concerted effort to provide plan participants with education and materials sufficient enough to help them understand their options and allocation decisions. A variety of media should be used. Periodically review the participation levels and asset allocations. You may want to demographically segment the results so it is possible to identify specific groups that need attention.

IV. Spot Check the Vendor
Periodically audit the data to ensure accuracy.

V. Verify Deposits, Withdrawals
Just as you would with your own checking account, make sure the plan’s financial transactions are accounted for.

VI. Y2K
Continue to ask for status reports on the vendor’s compliance with Y2K. It’s your fiduciary responsibility to make sure the vendor is Y2K compliant. There are three primary areas of concern – systems, investment decisions of the fund managers, and communication to the participants. For example, we recommend checking with the fund managers to see how Y2K will impact their buy/sell and cash positions as 2000 approaches. For example, some managers may decide to significantly increase his cash position. This could result in a variance from the investment policy and how the fund has been described to the participants. Communication to participants is another important issue. We need to know what your vendor is planning on providing to participants and when. The DOL has made it clear that the Y2K responsibility rests with the employer not the provider.

VII. Keep-Up
Stay aware of trends and legislation as they affect your plan and your participants.

VIII. Provide Timely, Accurate Data to the Vendor
Their data is only as good as what you give them.

Return to Press Room