Getting Started as a Plan Administrator

Updated 5 months ago by Richard Phillips, EA, AIFA, CPC, CPFA, QPA, QKA

As the plan administrator for your company's retirement plan, you're charged with responsibility for the operation of the plan and making sure that the provisions in your plan document are followed.

Don't worry! We're here to help you with all of this, but it's good for you to have an understanding of what all is involved with sponsoring a retirement plan.

Here are some key points to think about...

  1. Procedures for determining eligibility

    Eligibility requirements vary plan by plan and it's important that you and your employees understand when they're eligible to participate. Here are some questions to ask yourself to judge how well you're prepared:
  • What are your plan's eligibility requirements?
    • Are the eligibility requirements different for different types of contributions?
  • Which party will be responsible for determining which employees are eligible for the plan?
    • You?
    • Your payroll provider?
    • Your retirement plan provider?
  • What information will you need to accurately determine eligibility?
    • Hours of service?
    • Hire date?
    • Birth date?
    • Job description or company division?
  1. The process for enrolling your eligible employees into the plan

    Your HR department will need to be familiar with the plan's enrollment procedures and will want to work with us to establish an easy process for your employees. We will consider what works best for your workforce and how to provide the best experience possible.
  • Will enrollment be online or on paper?
    • Does your company meet the requirements for electronic disclosures?
    • Will enrollment be in your HR system, your payroll system, or in your retirement plan provider's system?
  • Will there be an enrollment meeting?
    • Who will conduct the meeting? - Your plan's advisor, your HR manager, your plan's service provider?
  • How will you furnish the required disclosures and enrollment materials?
    • Do you have the latest versions of the disclosures and enrollment materials?
  • How will you capture their waiver of participation if they decide not to participate?

  1. Remitting contributions and loan repayments to the plan in a timely manner

    The US Department of Labor has published rules that dictate the time in which an employer should remit employee contributions to the plan's trust account. The general guidance is "as soon as administratively feasible", but no later than the 15th business day of the month following the month in which the contributions were withheld from employees' pay checks.

    We can process an ACH draft from your company's bank account to help speed up this process, but we do need a data file from your payroll department or payroll provider in order to know the amount and employee allocation of the contributions in order for us to draft.

    Make sure your company's payroll department is aware of these timing rules and has procedures in place to remit contributions to your retirement plan as close to pay day as possible. We suggest setting clear responsibilities and expectations with your staff or payroll provider to make sure this process is owned by someone who understands the importance.

    Our system sends out automatic email reminders to the designated payroll contact at your company if a payroll cycle goes by without receiving your contribution file. This reminder is intended to help prevent compliance failures because sometimes things happen and someone may forget to submit the contribution file to us for processing.
  2. Understanding the rules for vesting for certain types of employer contributions

    Your plan may have employer contributions that are subject to a vesting schedule. You should be aware of your plan's vesting requirements and the methods used for measuring employees against those requirements for proper vesting accrual. Some plans have vesting schedules that require a certain amount of service from the employee for them to accrue vesting in the employer's contributions. Service can be measured in a variety of ways - how many hours an employee works in a certain time period measured from a hire date or the plan year.

    Luckily, we calculate vesting for you. But make sure you report the necessary service data to us so we can correctly calculate vesting for every employee.
  3. Knowing the withdrawal provisions in your plan and knowing when to approve or deny certain types of withdrawal requests

    Your plan may have certain restrictions on withdrawals and it's important that you understand some of the different types of withdrawals and what to look for when approving them. In-service withdrawals can be a source of confusion for your employees and they may think they're entitled to a withdrawal while they're still working for your company. But they might be surprised that there are additional age requirements or that there are only certain situations that qualify them for a hardship withdrawal.

    Check with us if you have any questions about these rules and we'll be glad to help guide you and your employees through them.
  4. Your obligations with year-end compliance testing and Form 5500 filings

    It's important to understand that your plan's Form 5500 filing may require a signature and that the information on your plan's 5500 is only as good as the information that was used to prepare it.

    That's why we ask that you review the information before we file.
  5. Selecting a default investment option for your plan

    If an employee does not make an investment election, your plan's recordkeeper still needs instructions as to how their contributions should be invested until they make an election. You can create standing instructions by setting a default investment option. This is sometimes referred to as a Default Investment Alternative (DIA) or Qualified Default Investment Alternative (QDIA) if you meet the notice requirements.
  6. Establishing an investment policy statement

    Most investment advisors will help you establish an investment policy statement (IPS), which is a document that helps you select and monitor the investment menu in your plan. This is one of the fundamental fiduciary reposnsibelties of a plan sponsor. This policy sets the performance parameters against which your plan's investment menu is judged, and this can help provide a systematic way of identifying underperforming investments that are in need of replacement.
  7. Maintaining a fiduciary file

    As you fulfill your fiduciary responsibilities by monitoring your investment menu and benchmarking your service providers, it's important to document the process that you went through as proof of your fiduciary prudence.

    We recommend a fiduciary meeting at least once per year.
  8. Selecting an investment option for your plan's forfeiture and suspense accounts

    Your plan's forfeiture and suspense accounts are holding accounts where money is held while it is not attributable to a participant and is waiting to be used for some other purpose. Make sure you've designated how this money is to be handled by your custodian and recordkeeper.
  9. Procedures for handling employee deferral election updates

    It's important to properly implement employee deferral updates in your payroll system to avoid mistakes that require corrective action. Make sure that you have designated people in your company that are responsible for receiving these changes from our system and can update your payroll system to implement them. It's important that they understand the consequences for failing to implement an employee's deferral election.
  10. Loan procedures

    If your plan allows employees to take loans from their retirement plan account, you will need to designate someone in your company to handle the setup and maintenance of loan repayment deductions in your payroll schedule.

    Also know that loans must be approved before they're issued. So someone in your company will need to review the loan request and approve or deny each request. This is typically done by a company officer that is authorized to act as Plan Administrator.

Your ERISA on-boarding team will send plan administrator credentials to the individuals that were authorized during your plan's setup process. Once you receive your credentials, you may log into our plan admin site at any time to view the information for your plan.

How did we do?