Best Practices in Plan Governance

Audit, Accounting & Advisory Services Officer BRENT CLARK, CPA Audit, Accounting & Advisory Services Officer Pugh CPAs bclark@pughcpas.com 865-769-1662

CONGRATULATIONS Signing Day https://www.dol.gov/ebsa/fiduciaryeducation.html Signing Day CONGRATULATIONS You just formed a Retirement Plan for your employees. You just became a Fiduciary

Named Fiduciary Functional Fiduciary Who is a Fiduciary? In Who is a Fiduciary? Generally those individuals or entities who manage an employee benefit plan and its assets. Named Fiduciary Functional Fiduciary

The Functional Fiduciary? In The Functional Fiduciary? Who is 3(21) Fiduciary A person is a fiduciary with respect to a plan to the extent: he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or he has any discretionary authority or discretionary responsibility in the administration of such plan

Fiduciary Significant? In Why is Being a Fiduciary Significant? Acting solely in the interest of participants and beneficiaries Carrying out their duties prudently Must follow the Plan Document (Unless inconsistent with ERISA) Diversifying Plan investments Paying only reasonable plan expenses Fiduciary Five:

In $227,000 Fees .5% 7% average return 35 years $25,000 Fee Impact

In $163,000 Fees 1.5% 7% average return 35 years $25,000 Fee Impact

New Powerhouse Conference In New Powerhouse Conference

In Other Lawsuits

Limiting Personal Fiduciary Liability Give Participants Control Fiduciary Liability Insurance Outsource the Function Document the Process This list is not all inclusive.

Selecting & Monitoring Service Provider Selecting & Monitoring The DOL says to consider the following when selecting a service organization: Information about the Firm itself Quality of the Firm’s Services Description of the Business Practices Selecting and Monitoring Pension Consultants: Tips for Plan Fiduciaries https://www.sec.gov/investor/pubs/sponsortips.htm

Selecting & Monitoring Service Provider Selecting & Monitoring The DOL says to perform the following when monitoring a service organization: Evaluate any notices received from the service provider about possible changes to their compensation or other information they provided Review their performance Read all reports they provide Check actual fees charged Ask about policies and practices Follow up on participant complaints.

Evaluate the Complementary In Service Providers Selecting & Monitoring Service Provider Selecting & Monitoring SOC Reports Read Them! Evaluate the Complementary User Entity Controls.

Fiduciary File Cabinet Documents Identification of the roles and responsibilities in plan management Plan Document & Amendments Adoption & Trust Agreements Summary Plan Description, Summary Annual Reports, Summary of Material Modifications Other participant communications IRS Determination Letter Investment Policy Fidelity Bond Fiduciary Liability Insurance Policy This list is not all inclusive.

Fiduciary File Cabinet Reports and Contracts Annual TPA testing and allocation reports Trust reports Form 5500 Audited financial statements Service provider contracts Monitoring Meeting minutes Investment fee & earnings benchmarking Support for investment mix changes Service provider SOC reports Service provider RFPs This list is not all inclusive.

In 401(k) Plan Checklist

In AICPA EBPAQC Plan Advisory, Effective Monitoring of Outsourced Plan Recordkeeping and Reporting Functions Department of Labor, Meeting Your Fiduciary Responsibilities Department of Labor, Fiduciary Education Webcasts IRS, 401(k) Plan Checklist Resources/ Links