Perry Wolkowitz, Director, Finance & Administration, EIMC LLC, is a small-plan sponsor – his plan includes about 35 employees spread throughout the U.S.  He led the other panelists – William P. Elmslie, EVP, Head of National Intermediary Distribution and Service, ING Financial Advisers, LLC;  Don Jones, Founder & CEO, Fiduciary Doctors LLC; and Michele Suriano, President, Castle Rock Investment Company – through some of the challenges he faces while administering his company’s 401(k) plan.

The first challenge Wolkowitz brought up is that of plan investments. With so many funds out there, he said he wants to give his employees enough choices.  So he picks a fund line-up with the help of his advisers. But every few months, he’ll get a notice saying some fund is on a watch-list – then soon after that, he’ll get another notice saying he needs to remove that fund.  He fears that this makes him look bad and he’s not sure if he is going about it the right way.   

Don Jones of Fiduciary Doctors advised Perry that he shouldn’t be worried that he’s moving assets around too often.  The way Jones see it, the plan fiduciary is the parent of the plan – and sometimes, the parent has to take action, even if the “children” (participants) aren’t sure of the reasons why the action was done.  He also contends that the deeper the research process is before investments are selected, fewer changes will be necessary down the road.

Michele Suriano of Castle Rock Investments agreed, saying a plan sponsor should not be afraid of fund changes.  She said they are common, especially in actively managed funds. She said in small plans, it’s critical to determine who is a fiduciary.  She also suggested establishing a charter delineating the duties of each person.  Another suggestion was to revisit the investment policy statement; what is it telling you to do? “It is a dynamic, living document,” she said, “Don’t be scared to change it either.”    

Bill Elmslie of ING said above all, you still need an adviser to walk you through the process.  He said something that troubles him very much is when ING wins a new client, all too often he sees plans that have been going along unadvised.  When a plan investment lineup is unadvised, he has found that too often, poor-performing funds are not removed.  Elmslie emphasized that the job of a plan fiduciary is to “select, monitor, and replace under-performing funds.”

Another challenge Wolkowitz discussed is that of compliance.  He explained how he’s never sure what will be thrown at him next.   

Suriano recognized that it takes a lot of work to maintain a compliant plan – but there is no short cut around it. No matter the size of your plan, big or small, they all require work.  But there are tools you can use, she said.  She recommended checking out irs.gov/ep (for “employer plans").  There is a list of the top 10 401(k) mistakes and sponsors should go through all of them.The most common mistake according to the site, she said, is not executing amendments sent out by the third-party administrators, which needs to be done.“Execute it, copy it scan it, send it back to them, and send it immediately to everyone who’s impacted: HR, finance, and payroll,” she said.  Once everyone sees the paperwork, it will be much easier to get it taken care of.     

Elmslie added that if you feel like it’s all being thrown your way – like Wolkowitz felt – you need to find a way to manage it around your schedule as a sponsor.  Schedule and structure your annual meetings (or bi-annual meetings) and make sure everyone you’re working with is there – the adviser, the provider, the TPA – remember that in the end, it has to be a team effort.