It's annual review time! At least once each year, retirement plan sponsors should be meeting with their 401(k) plan investment advisor to review what happened in the plan during the prior year. Those plan sponsors that are already meeting with their adviser on a quarterly basis take note - the annual review should be a little different. All annual reviews should cover:

  • Investment option performance - from a different perspective. Plan sponsors should review performance at the annual review meeting through a slightly different lens. Now is the time to consider making any adjustments to your find line up. Barring emergencies, plan sponsors should try and confine investment menu changes to once per year. After year-end is best since any changes can be included in employee education sessions prior to rollout.
  • Investment menu changes.  Most plan sponsors end up making at least a few investment menu changes each year. Your adviser should have anticipated which funds might need to be deleted or added and come to the meeting with replacement suggestions. For example, this year I will be recommending to my clients that they add fixed income options that can be expected to perform well in a rising interest rate environment.
  • Employee education. Discuss when employee education sessions should take place during 2014. Plan sponsors will want to synchronize these sessions with the effective date of any investment menu or plan design changes. It is always best to hold employee education sessions as close as possible to the date these changes go into effect.
  • Plan design review. Is your plan design still leading-edge? Should you consider converting your plan to a safe-harbor plan design? Maybe it is time to re-enroll all of your participants in target date funds? Finalize any plan design changes or actions so they can be incorporated into your annual employee education sessions.
  • Fee review. The Department of Labor expects you to review provider fees at least once per year. I review my fees with my clients during the annual review meeting when I distribute my updated ADV. If your investment advisor is not proactively leading a discussion of his/her fees with you annually, you will need to raise the question.
  • Review of the Investment Policy Statement (IPS). Each year your adviser should ensure that the plan continues to follow the procedures outlined in the IPS. Since this is a very dynamic business, it is not uncommon to have changes to the IPS each year.

If your annual reviews with your investment advisor have not included these topics in the past, consider asking him/her to cover them this year.
Robert C. Lawton is president of Lawton Retirement Plan Consultants, LLC a Registered Investment Advisory firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be contacted at or 414.828.4015.

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