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  • Your 401(k) Due Diligence Check-Up Template – Made For Associations



    When was the last time you performed a due diligence review on your 401(k) Plan?

    Did you know: As a retirement plan sponsor you are a plan fiduciary. Therefore, it is your obligation to conduct a periodic review to ensure your plan’s design and associated fees are suitable for, and in the best interest of, your participants.

    In order to meet this responsibility, the general rule of thumb is to conduct a provider review every three years. The most common method of conducting this due diligence is by sending your plan “out to bid” through a request for proposal (RFP). Benefits of conducting an RFP include:

    • maximizing cost savings by placing your organization in the strongest possible negotiating position in regard to plan components and fees;
    • keeping abreast of best retirement plan practices; and,
    • providing documentation that shows you have executed appropriate due diligence practices as part of your fiduciary duties.

    Sound daunting? Read on for tips and an RFP Template that will help prepare you to fulfill your fiduciary duty and be prepared to effectively shop for and secure the providers you need to deliver this important employee benefit.

    Tip #1: Appoint a committee to handle all facets of the proposal. Ideally, this committee will have three to five members who have relevant expertise. Note – the decision maker within the committee in charge of hiring and implementing a 401(k) Plan and its providers will be considered a Plan Fiduciary with the responsibility of ensuring the decisions made are in the best interest of your employees.

    Tip #2: Identify your organization’s goals and priorities for the retirement plan. Start by looking at the purpose of offering the 401(k) plan (e.g. to attract/retain employees and/or to boost employee financial wellness). Then consider features and benefits that are important. For example:

    • Ease of administration
    • Fiduciary support
    • Availability of participant educational tools
    • Quality of the online experience, communications, and functionality, both for the plan sponsor’s administrative person and for the participants
    • Provider’s credentialed experts and tenure in the 401(k) business
    • Customer service excellence
    • Plan features such as availability of safe harbor designs, plan loans, and Roth options
    • Cost/plan fees
    • Ancillary services such as financial wellness tools

    Tip #3: Review your current provider relationship carefully in light of the insight gained from the exercise in Tip #2. Identify the pros and cons within the relationship. This will help you solidify a good list of must have features and benefits and desired improvements and enhancements that you can use to assess RFP respondents. It will also help you create the introduction/plan overview section in your RFP.

    Tip #4: Research potential candidates to narrow the competition which will lead to a more focused search that will increase the odds that you will end up with the right providers for your plan. Ask colleagues, friends, family members, your association, etc. for referrals.

    Tip #5: Simplify the RFP process by sending the RFP electronically to candidates and by making responding to the RFP easy through use of a Word file or fillable PDF. Also, provide an appropriate amount of time for candidates to respond – typically one month.

    Avoid waiting until you encounter a problem with your current plan providers. Being methodical and proactive can help to identify and solve unknown problems before they occur, and this practice will keep you in compliance with your due diligence fiduciary duty.

    ASAE knows associations, and we put that expertise to work every day to design, build, and deliver solutions to meet your specific needs.

    The ASAE 401(k) Retirement Program is a retirement solution created by ASAE and delivered by a team of retirement plan experts selected through careful due diligence, including:

    • Empower Retirement as Recordkeeper
    • Pensionmark as Fiduciary Investment Manager
    • ASAE Retirement Trust Committee as Discretionary Trustee

    This is a unique 401(k) offering. that It is association-centric and offers lower fees and expenses due to the negotiated buying power of ASAE, a top-notch administrative and participant platform, unparalleled fiduciary oversight, and white glove service.

    Our mission is to be the trusted source for essential business solutions. Connect with us at asae401k.org or by calling 888.950.2723 x2880.

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