Key Concepts in Choosing Plan
In choosing plan administrative services, the smaller
employer should consider these important factors:
- Use creative presentations
Enhance plan effectiveness with Participant communications. We believe that it is a mistake to provide the bare minimum in disclosures to
plan participants. The cost of a plan, both contributions and administrative expense, can be wasted by failing to make the participants aware of this important benefit. Companies can profit greatly when the
plan administrators invest some creative energy in making certain that the form, frequency, and content of communications to participants are designed to carry out
- Efficiently collect information
Capitalize upon existing information systems. Most retirement plan administration today is accomplished with the use of computer software. It is simply common sense to make use of data that already exists in electronic form as a part of
plan administration. Anyone having responsibility for an aspect of the
plan's administration should be attentive to opportunities to capture information already existing in payroll packages, human-resources software, and on the
websites of investment custodians.
- Be proactive in legal compliance
(and simple) practices avoid potential penalties. Most plan administrative actions can be both carried out and recorded in a single document. Standardized forms, both paper and electronic, should contain all elements necessary to the action. If, for example, an action requires both participant and administrative committee approval,
there is seldom a need to have multiple documents.
- Monitor plan effectiveness
attention to the results of your efforts. It is easy to lose sight of the objectives that have brought about an existing retirement plan. Companies that regularly evaluate the extent to which their benefit plans meet objectives
increase their competitiveness much as they would by monitoring their product or service lines.
- Make plan design an ongoing process
Thoughtful changes will reduce costs and preserve plan efficiency. Most plans can be amended without significant expense, particularly those designed on prototypes. While the
law imposes some restrictions on certain types of feature changes, the key elements of the
plan can be restructured to make sure that it efficiently meets objectives. Often, some simple fine-tuning can increase employer and participant satisfaction with the
plan, or reduce administrative burdens.