401(k) Plan Sponsor Guidance

The spread of the coronavirus (COVID-19) has impacted communities, organization, and individuals throughout the world. Volatility continues to permeate the domestic and international markets as local, state, and the federal governments implement containment strategies and relief measures.

The Employee Retirement Income Security Act (ERISA) of 1974 established the role of the Fiduciary to the stewardship of employer sponsored retirement plans. As Fiduciaries, Plan Sponsors are required act solely in the interest of plan participants including, but not limited to, providing a diverse array of investment options, following a set process to review the plan investments, fees, and documenting their actions.

Plan Sponsors should consider the following as we navigate these unprecedent times:

Participants

Ensure participants have access to information on the following:

• –vendor website, mobile app, direct phone number
• Where to find information on their plan’s investment offerings—performance & fees
• How to change their contribution rate
• How to access their money in the event of financial hardship—loan or hardship withdrawal
• (e.g. tax advisor, financial planner) to determine if adjustments to their 401(k) are the right course of action

Process

• Perform regularly scheduled 401(k) Committee Meetings
• Follow the Investment Policy Statement
• Concentrate on relative performance measures vs. absolute returns (e.g. peer performance, expense, etc.)
• Review performance in relation to current market environment, emphasis on long-term performance

Procedures

Consider administrative processes to ensure the highest level of flexibility for participants with respect to:

• Changing contribution rates
• Initiating a loan
• Requesting a hardship withdrawal

Company Expense & Cash Flow

If there are cash flow or expense concerns, consider the following:

• Review plan fee structure for potential changes
• Fund your employer match at year end and/or change match to discretionary