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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

For many people, the start of a new year means resolutions to get in shape, save money and spend more time with family. For 401(k) plan administrators, it’s a good time to reflect on the plan’s operation and make tune-ups where needed.  Here are six steps you can take to make sure your plan is ready for the new year:

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1 &nbsp;Think about whether you need to make any changes&nbsp;to your plan for 2017. &nbsp; Some items must be completed before the start of the plan year, such as certain changes to matching or profit-sharing contributions. Other things can be done after the start of the year, such as distribution requirements or participant loans, but you’ll still want to be timely and communicate them to participants.&nbsp;

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2  Speaking of plan changes, make sure any amendments made in 2016 are signed properly and timely. Now is a good time to look back and make sure your documentation for any 2016 change is complete. Do you have proof of authority to make the change, such as a corporate or committee resolution? Was the amendment signed? Were participants notified of the change, if necessary?

3  Ensure your 2016 committee meeting minutes are organized and schedule your 2017 meetings. If your thought when reading this is “what committee meeting?” now is the time to get things in order. Most 401(k) plans allow the plan sponsor to appoint a committee to administer the plan. Regular tasks can be delegated further to managers or administrative staff, but the committee retains oversight authority. Some plans have an additional committee that is responsible for managing the plan’s investments, and some just have one committee that handles both the administrative and investment functions.

Committees should meet at least quarterly and those meetings should&nbsp;be recorded in meeting minutes.&nbsp;

If you need to make any changes to the committee structure or the schedule of meetings, now is the time to do it.

4 &nbsp;Consider whether an authority matrix or other delegation of authority&nbsp;to the right people would make things easier — and more compliant. Speaking of delegating, the start of a new year is a good time to think about whether the authority to handle plan tasks is in the proper hands. For example, is your HR Manager signing contracts and the Form 5500, but has no actual authority to do so? Does the plan say that the company is supposed to be determining a participant’s eligibility to receive a hardship distribution, but that’s actually being handled by someone in the Benefits Department?&nbsp;

A delegation can be done by a resolution, consent or through an “authority matrix,” which lists common plan responsibilities and details who has the authority under the plan document and to whom it’s being delegated by the matrix. The matrix can also serve as a good reference for administration, eliminating the question of “who should sign this?”

5 &nbsp;Decide whether you need to do an RFP in 2017 for any third-party provider. How long has it been since you’ve reviewed the plan’s recordkeeper? Is it time to look at the investment advisor? Are you satisfied with the services? &nbsp;Have you benchmarked the plan fees lately? Ideally, plan service providers should be reviewed every three to five years, with a potential RFP process completed every five years. Just because you’ve had a longstanding relationship with a provider doesn’t mean keeping that provider is in the best interest of the plan participants.&nbsp;

6 &nbsp;Make sure your payroll system is set up for the new compensation and contribution limits. &nbsp; The deferral limit stayed the same for 2017 at $18,000, and the catch-up limit is the same at $6,000. But the maximum compensation you can take into account for calculating deferrals and other contributions changed from $265,000 to $270,000 for 2017. And the total limit on contributions to defined contribution plans changed from $53,000 to $54,000. A few other less well-known limits changed as well, so be sure to check the chart provided in this newsletter and update your systems as necessary.

Need help with any of this? &nbsp;Feel free to contact any of our employee benefits attorneys with questions. 

Partner

Jennifer A. Watkins

Employee Benefits

Six Steps to a 401(k) Plan That’s Ready for 2017

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Six Steps to a 401(k) Plan That’s Ready for 2017

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