Maintaining good documentation of the setup and operation of a retirement plan is critical. As a 401(k) plan sponsor, it is your responsibility to maintain good documentation and keep it in-house.
WHAT IS A FIDUCIARY FILE?
A fiduciary file is the group of documents that you should maintain as the 401(k) plan sponsor. There could be 25 to 30 different documents that you should be able to provide to an auditor. Examples of these documents are the plan adoption agreement, meeting minutes, fee review documents, and 401(k) plan advisor agreements.
WHY SHOULD EVERY 401(k) PLAN SPONSOR HAVE A FIDUCIARY FILE?
If you are the subject of a government audit, you should be able to produce the requested plan documents. Stating “my recordkeeper holds these documents for me” won’t help your case. If you don’t have the documents on hand when they are requested by the government auditors, it could lead to further investigations and red flags about your plan’s operations. If you can’t show evidence of your due diligence, the government will assume that you haven’t done it.
Having a complete fiduciary file will also help ensure compliance with regulatory obligations and create a firewall to defend against employee complaints and sanctions.
WHAT DOCUMENTS SHOULD BE IN A FIDUCIARY FILE?
Our team has created a 401(k) fiduciary file checklist (download below) that outlines each document you should include in your in-house fiduciary file.
There are three main categories of documentation that you will want to include in your fiduciary file. They are administration & reporting, investment due diligence, and service provider agreements.
Feel free to download the checklist below and use it to create your own 401(k) fiduciary file. When it comes time for an audit, you will be sure to thank us!
401(k) FIDUCIARY FILE CHECKLIST
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I am new in finance and the new terminology as 401(k) as you mentioned – it is new for me. Can you explain more about 401(K) plan sponsor?
Hi there! A 401k plan sponsor is a designated party that sets up the retirement plan for the benefit of the organization’s employees. The responsibilities of the plan sponsor include determining membership parameters, investment choices, and in some cases, providing contribution payments in the form of cash and/or stock. To learn more, check out this article.
Thank you for your immediate response!