The IRS 403(b) regulations require that Plan Sponsors provide oversight and be actively engaged in the plan’s operation and delivery. In order to operate and maintain a plan, you must follow the terms of the plan.
One of the key themes behind the Internal Revenue Code and the Department of Labor regulations governing 401(k) and 403(b) retirement plans is Plan Sponsor oversight to the plan. In other words, a Plan Sponsor must know what is happening in their retirement plan. In the event of an IRS audit of the plan, you must be able to demonstrate that you provide supervision, control, and administration to the plan.
A Retirement Plan Oversight Committee (RPOC) is a wise and effective way to help ensure that your legally mandated oversight requirements are being met. An RPOC is a group of people that provide supervision, control, and administration for the organization’s retirement plan.
Wise RPOC oversight of your plan will result in three main benefits:
1. Effectiveness
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The Committee works towards producing a greater rate of return on the monies and effort invested by the organization in the plan.
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The Committee increases consistency and continuity of messaging resulting in better understanding and appreciation of the plan.
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The Committee establishes measurements of effectiveness for evaluation and improvement to the plan.
2. Efficiency
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The formal process, consistently conducted, becomes a powerful way to increase programmatic value and reduce time and effort.
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The systematic process focuses on review, evaluation, and change.
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Communication is maximized between the Plan Administrator, Committee, and Plan Provider that enhances the efficiency of plan operations and helps ensure all available services are known and utilized.
3. Impact
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The Committee demonstrates that you care about the plan and participants (including the investments, education, and participation).
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The Committee’s composition brings a variety of points of view to the process so the average participant, not just the experienced or knowledgeable participant, is represented.
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The Committee’s review process reveals broader organizational issues to the organization’s leadership.
The activation and consistent operation of a Retirement Plan Oversight Committee concretely demonstrates your commitment to both oversight and engagement.