401(k) Plans: Don’t Overlook Your Company’s Multi-Million Dollar Investment

Even though it is often overlooked by plan sponsors, a 401(k) plan is one of the most important assets to your company because it pertains to the retirement welfare of your employees. 401(k) plan assets are not considered an asset to the company itself. They are never recorded as an asset on your company financial statements and, in fact, the only impact that they have on corporate financials relates to recording employer contributions through the income statement. That said, the responsibility and oversight of a 401(k) plan should never be disregarded, especially when it comes to the maintenance of plan investments.

As indicated by the Department of Labor, the responsibility of a plan fiduciary is to act solely in the interest of plan participants by carrying out the duties of the plan with skill, prudence and diligence. Carrying out such duties can be extremely difficult for plan sponsors in reviewing plan investment offerings for performance and fees as this is not typically the expertise of plan sponsors. This does not mean that a plan sponsor has to be a certified financial advisor in order to sponsor a 401(k) plan; however, you may need to consult a third party investment advisor. If you do not currently meet with a third party to review your plan investments, are you able to answer the following questions:

• What type of investments are offered under you plan?
• What is the nature and risk of each investment?
• Do you consider your investment offerings diverse?
• How are fees assessed within each investment?
• What investments are currently on your “watch list”?