Choosing an Investment Menu
Updated
by
Richard Phillips, EA, AIFA, CPC, CPFA, QPA, QKA
Normally, plan sponsors form an investment committee that may consist of corporate officers and an investment advisor. This committee is responsible for the initial selection and ongoing monitoring of the investment menu that will be offered to plan participants.
Offering an investment menu is a fiduciary act and should be documented thoroughly to memorialize the due diligence and prudence that was exercised while selecting an investment menu for your plan.
Some plans adopt an investment policy statement (IPS), which specifies the investment principles and characteristics by which the investment menu will be managed and measured. An IPS is a great tool to help demonstrate that the plan's investment decisions are being made with the kind of care that is required of plan fiduciaries.
Investment menus in retirement plans typically consist of individual mutual funds, ETFs, asset allocation models, money market deposit accounts, and self-directed brokerage windows.
If ERISA serves as your plan's investment advisor, we prepare your plan's investment policy statement on your behalf and help uphold the fiduciary standards that are required.
Once an investment menu is chosen, the designated investments will be assigned to your retirement plan.
As part of your investment menu selection process, you should designate default investment options that are utilized when a participant does not make an investment election for their account. You should also designate an investment to use for your plan's forfeiture and suspense accounts.
