Outsourcing Your Retirement Plan Noticing
Today we will be discussing the benefits and precautions of outsourcing responsibilities within retirement plans.
Many companies implementing retirement plans might lack the in-house expertise to ensure the plan operates compliantly and effectively. So, they often hire external experts. Commonly, plan sponsors bring in a recordkeeper for web accessibility and daily account evaluations. They might also engage a third-party administrator to manage the plan's documents and regulatory duties. Additionally, hiring a financial advisor for investment selection and oversight is a typical practice.
In early 2021, the Department of Labor introduced best practices for distributing notices and communicating with participants. These guidelines emphasized ensuring participants receive proper communication and addressing issues of "missing" participants due to outdated data. The added procedures can overwhelm plan sponsors. If they feel under-equipped, they can seek external support. However, hiring external help requires thorough evaluation.
So when thinking about outsourcing these services, you will want to consider the following:
- The scope of the service provider's work, including responsibilities and fees.
- Their guarantees.
- Whether they accept fiduciary responsibility.
- Their capability to back liabilities.
- and lastly, Their industry expertise.
Be cautious: failing to conduct proper checks can lead to issues with the Department of Labor, IRS, or even participant-hired lawyers, adding unforeseen costs.
Outsourcing, including participant communication and notice distribution, is valid, but plan sponsors must frequently assess these external providers.
If considering outsourcing your notice duties, Plan Notice can assist. We manage participant communication and distribute essential notices, complying with 2021's best practices. We also maintain a log of all communications, verifying receipt. With us, you're shielded from costs or fines due to notice errors.
For more information on outsourcing your retirement plan noticing, contact us today.