Key Concepts in Choosing Plan Administrative Services

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 plan objectives. 

  • 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

Sound (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

Pay 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. 

 
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