Concepts in Plan Compliance Management
The surest way to maintain Plan compliance is to
engage an experienced and knowledgeable third-party administrator, and to
consider these points:
It is false economy to cut this corner.
Work may be divided, but final responsibility should reside in one place.
Make sure that your advisors and appropriate personnel exchange information.
Have your administrative service provider explain what they do and when.
Ask your administrative service provider how to limit liability and document
It is false
economy to cut this corner. Employee benefit
plans represent a complicated interplay between tax law, labor law,
accounting, human resource management, and business strategy. Penalties for
simple compliance failures can be extraordinarily large. These burdens are
appropriately put in the hands of persons with experience and expertise.
Work may be
divided, but final responsibility should reside in one place. We
have encountered far too many situations where penalties or plan
qualification issues arose because several advisers each thought that the
others were handling the matter in question. Good attorneys, good
accountants, good investment counsel, and good employees, but none had considered the particular issues to be their
job. Make it the
responsibility of your third-party administrator to coordinate plan
Make sure that
your advisors and appropriate personnel exchange information. Confidentiality
is important to all of us, and professionals are appropriately reluctant to
share information without authorization. When it comes to your benefit
programs, it will ordinarily be to your advantage to direct your advisers to
consult with each other as needed.
administrative service provider explain what they do and when. Professional
plan administrators are accustomed to providing explanations of their
services and of the rules that apply to employee benefit plans. They are
also familiar with the compliance requirements that face your plans.
Having them explain their undertaking will assist you in
working with them, will help you understand your responsibilities in the
process, and will reduce the potential for misunderstandings.
administrative service provider how to limit liability and document your actions. Plan administrative services are
frequently separated from investment services (for good reason). Your
professional plan administrator can, however, help you to ensure that your
approach to investment responsibilities is adequate, and that it affords
you the greatest available measure of protection from liability. You can
also obtain some guidance from them regarding the types of
record-keeping that will help document your attention to your fiduciary