December 18, 2012

Bylaws of a 401(k) Administrative Committee

A plan sponsor’s administrative committee needs to abide by written bylaws, according to a white paper from RidgeWorth Investments of Atlanta, titled “The Best Practices of Retirement Plan Committees.”

Reported by Lee Barney

In it, RidgeWorth notes that bylaws should include such as the following:

1) Purpose. Ensure the plan is compliant with all Employee Retirement Income Security Act (ERISA) and Department of Labor (DOL) regulations, and hire and monitor plan providers and advisers.

2) ERISA. Meet ERISA’s five requirements: a diversified selection of investment options; assets managed in a prudent manner; reasonable costs; adherence to the investment policy statement; and all decisions made in the best interest of the plan and its participants.

3) Responsibilities. Members of the administrative committee are responsible for: maintaining fiduciary oversight of the plan’s investments, as stated above; ensuring that participants have the resources they need to make informed enrollment, deferral and investment decisions; confirming that the plan is in compliance with industry regulations; and identifying and implementing best practices for resolving issues related to plan administration and compliance.

4) Members. The administrative committee, in partnership with the investment committee, is the plan fiduciary.

5) Logistics. A plan administrative committee typically meets every quarter.