The Investment Policy Statement is a legal plan document. It needs to be treated accordingly. This means to deliberate it with diligence before adopting it. Even when it is adopted, it must be regularly inspected and revised as needed.
Tag "Barry Mione"
Including these will make 401k plans safer for plan sponsors and more successful for plan participants.
Unlike a generic vendor agreement, the IPS is a formal plan policy document that defines the parameters between the plan and relevant vendors. This is why it can also be a terrible trap.
Whether a plan sponsor decides to adopt a 401k IPS remains an open question. It’s not a question that should be treated casually. Every plan situation is different. Plan sponsors therefore must conduct a thorough due diligence to determine what’s best for their plan.
Although we’ve seen a broader acceptance of using an IPS, their use is by no means universal and particularly lacking among smaller employers. Perhaps there’s a realization that, if you don’t get the IPS right, you’ll only increase your liability.
Whatever the future holds, we live in a present where there is no such thing as a free lunch; thus, the basic notion of caveat emptor continues to hold true.
