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Where Can A Plan Participant Find the 401k Plan’s Investment Policy Statement?

Where Can A Plan Participant Find the 401k Plan’s Investment Policy Statement?
February 11
00:03 2020

OK, one more time for those just joining us. You know what a 401k Investment Policy Statement (“IPS”) is (“What is a 401k Investment Policy Statement?FiduciaryNews.com, November 26, 2019), you’ve decided you should have one (“Should a Plan Sponsor Adopt a 401k Investment Policy Statement?FiduciaryNews.com, December 2, 2019), and you’ve familiarized yourself with the primary purpose of a 401k IPS (“What is the Primary Purpose of a 401k IPS?FiduciaryNews.com, January 7, 2020).

You’ve identified the ways a 401k IPS can achieve that primary purpose (“5 Critical Elements Every 401k IPS Must Contain to Achieve Its Primary Purpose,” January 14, 2020), and you’ve identified who should be tasked with putting the IPS together (“Who Is Generally Responsible For Designing, Detailing, And Approving The 401k IPS?” January 28, 2020).

You’ve crafted the document and determined when you should adopt it (“When Do 401k Plan Sponsors Usually Adopt an Investment Policy Statement?FiduciaryNew.com, February 4, 2020). Once it’s adopted, the IPS must be made accessible to plan participants.

“A participant can request the IPS from their employer or the plan’s financial adviser,” says Matt Ahrens, Chief Investment Officer at Integrity Advisory, LLC in Overland Park, Kansas. “Both should have the IPS readily available.”

Because the IPS is not a standard document and may contain proprietary information, it’s best if the process to obtain the document is not casual. Deborah A. Castellani, Sr. Fiduciary Strategist/Principal at Akros Fiduciary Management in Austin, Texas, says the request to see the IPS “is usually done in writing.”

The IPS is primarily a management tool for the plan sponsor to help better manage plan service provides. As such, it often contains information not essential (or generally of interest) to plan participants.

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“An IPS is not typically published,” says Greg Patterson, CEO of The Advisory Group in San Francisco, California, “but plan participants can ask their HR representative who can facilitate getting the IPS from the Retirement Plan Committee.”

In many cases, companies are finding it easier to offer plan documents through an online gateway. “Optimally the IPS would be able to be found on the plan’s website along with other required documents,” says Daniel Milan, managing partner of Cornerstone Financial Services in Southfield, Michigan. “Otherwise, it can be obtained by requesting it from the plan sponsor.”

Since the plan sponsor tends to rely on third party service providers (usually the recordkeeper) to maintain and operate these web-based gateways, this should be a significant factor when deciding which vendor to select. “A reputable 401k company will often make that information readily available through an easily accessible website,” says Barry Mione, CEO of SaveDay in Austin, Texas.

Most often, the plan participant will be interested in the due diligence reports that are generated as a result of adopting an IPS. These reflect the relevant characteristics of the options on the plan’s investment menu.

Well written due diligence documents will obviate the need for plan participants to refer to the IPS.

Christopher Carosa is a keynote speaker, journalist, and the author of  401(k) Fiduciary SolutionsHey! What’s My Number? How to Improve the Odds You Will Retire in Comfort, From Cradle to Retirement: The Child IRA, and several other books on innovative retirement solutions, practical business tips, and the history of the wonderful Western New York region. Follow him on TwitterFacebook, and LinkedIn.

Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

1 Comment

  1. roger levy
    roger levy February 12, 11:44

    While a participant may certainly request a copy of the IPS, don’t be surprised if, on the advice of counsel, the request is declined. Some courts do not treat an IPS as a “contract, or other instrument under which a plan is established or operated” requiring disclosure under ERISA. Personally, I believe that participants should have access to the IPS and an explanation of how funds and service providers are selected and monitored. Such transparency fosters trust and, who knows, maybe, improved savings rates?

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