As we continue to learn more about the 401(k) fiduciary process, you should note that the Department of Labor (DOL) is just as interested in the procedures you have in place as the actual performance of your organization's retirement plan. Likewise, a common mantra in the world of fiduciary best practices is “if it hasn’t been documented, it didn’t happen.” Join us for today’s class when we discuss how Meeting Minutes can help your 401(k) committee stay organized and track the plan’s progress over time.
First, what exactly are 401(k) Meeting Minutes? Meeting minutes are a written summary of any formal 401(k) committee meetings. The minutes should start by referencing the attendees of the meeting, the date, and where the meeting was held. The committee meeting generally begins with a motion to approve the last meeting’s minutes. The meeting can then progress to discuss pending actions, status updates, and new motions. These topics can include investment performance evaluations, participation trends, fee benchmarking, provider analysis, enrollment meetings, etc.
In order to make sure your process is consistent, you may consider implementing a meeting minutes template. One of your plan providers may have a template for you or your advisor may take minutes and maintain the file on your behalf. In order to make sure your minutes are benefiting the committee, I have a few recommendations. The record is meant to be a summary of the conversations, not a transcript of the meeting. Any plan updates or recommended actions should be recorded. Likewise, any reports referenced in the meeting minutes should be attached and stored together. An effective committee meeting can result in identifying several areas for improvement and the associated action items. Recording who will be performing which action will help the committee stay organized and make progress in enhancing the retirement plan between meetings. Meeting minutes and any supporting material should be stored in a Fiduciary File to document the history of the 401(k) Plan.
Meeting minutes are designed to show that the 401(k) committee is following a fiduciary process. However, your minutes can become a source of liability if not properly maintained. For example, let’s say that your committee has discovered excessive participant fees within your plan that were previously unknown to your team. If the committee identifies that the plan is billing extraordinarily high investment fees to the participants and does not take any action to cure the problem, it could be construed that the fiduciaries are aware of a clear deficiency within the plan but chose not to act on this information. To identify an area for improvement within the retirement plan is not a breach of fiduciary duty but to not pursue a course of action to address the deficiency can present a fiduciary liability.
I always recommend that the 401(k) committee records meeting minutes as if an outside party were reading them. This will help your team to memorialize the evolution of the plan without increasing your liability. Should the IRS or the DOL ever audit your 401(k), your meeting minutes will help to illustrate your fiduciary process, the options you’ve considered, the changes made, and the committee’s rationale for doing so.
When run properly, meeting minutes can be one of your greatest resources to help insulate the 401(k) committee from fiduciary liability. Join us for next week’s class when we discuss how to further protect the retirement plan with a Fidelity Bond and Fiduciary Liability Insurance…
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