401(k) Plan Administrator Responsibilities

There are many different types of 401(k) plans–from Traditional to Roth, SIMPLE to Safe Harbor. How do sponsors choose? Plan administrators can look at the company’s goals to help choose the best structure for the plan.

Administrators help sponsors prepare and distribute a Summary Plan Description. They assist in the determination of eligibility, enroll participants, and set up employer contributions. As necessary, they can help educate employees on the benefits and requirements of participating in the plan.

The 401(k) plan administrator approves all loans and distributions while monitoring for plan compliance with federal rules and regulations. Most importantly, 401(k) administrators ensure that employee contributions and distributions are in accordance with the law.

Should employers or employees have any questions pertaining to the plan, administrators are available by chat, email, or phone to lend assistance.

Plan administrators maintain a Service Organization Control (SOC) report to ve service providers. The SOC report adds another layer of internal controls to ensure the integrity of stored financial information and prevent fraud.

Any plan with 100 or more participants must undergo annual plan audits and submit the Form 5500 financial statement to the IRS each year. The plan administrator coordinates this effort to avoid compliance failures and penalties. Annual nondiscrimination testing may be performed by administrators or their subsidiaries.

Sometimes the matching contribution needs to change, a new investor is added, plan eligibility changes, or a company merger takes place. The administrator:

• Implements any necessary changes
• Sends out the mandatory notices to inform plan participants of the changes

In the event of a change in plan administrator, old and new providers work together to transfer all documents and account information.

Some plan administrators work with preferred vendors who give financial advice and select the investment portfolios. Alternatively, administrators may allow sponsors to manage their own funds or choose any broker. Sponsors can get referrals from administrators if they aren’t sure where to turn for reliable portfolio assistance.

Some plan administrators are also designated ERISA fiduciaries. Third-Party Administrators may agree to assume financial liability for losses in the plan. Additional duties may include:

• Providing oversight for administrative expenses paid by the plan
• Overseeing contractual relationships
• Recommending plan diversification as needed
• Soliciting input from investment consultants
• Exercising prudence in following plan documents to the letter

Contact Ubiquity to learn more about the 401(k) plans we administer. Find out how your small business can benefit from our oversight of your retirement savings program.