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 "Matt Ahrens"
There are many different types of plans, particularly when plan sponsors pick a 3(21) or 3(38) adviser. Which service provider arrangement a plan sponsor chooses impacts how the IPS will be constructed – and how the relevant parties contribute to that draft.
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.
It’s important to remember that the 401k MEP is just a vehicle. Whether they truly meet the objective of employees saving more for retirement and doing so effectively and efficiently comes down to execution.
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.
