To help employers properly administer their 401(k) plans, in 2022, Foley & Lardner LLP is authoring a series of monthly “401(k) Compliance Check” newsletters. This article discusses some of the policies that are important for the proper administration of 401(k) plans.
In June’s 401(k) Compliance Check, we looked at the importance of understanding your 401(k) plan’s definition of compensation and what to do if you had been applying your definition incorrectly. This month we will take a look at five policies or procedures that are important for proper 401(k) plan administration.
401(k) plans are required to maintain some of these policies either by ERISA or under Department of Labor (DOL) guidance, and others, while not necessarily required by law, are helpful in the event of a DOL audit or participant litigation. Having clear policies and procedures in place also helps employees involved in plan administration do their job more efficiently by mapping out appropriate steps to take when various situations arise.
Often, you can obtain these policies or procedures from various plan vendors, such as your 401(k) plan administrator or your plan’s investment consultant. But, with respect to some of these policies, such as the cybersecurity policy, you may need to reach out to qualified legal counsel for assistance.
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