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7 Questions to Ask Non-Profit Plan Sponsors



Written by: Aaron Friedman | Principal Financial

I recently wrote a blog post about seven administrative sins. I started thinking about the number 7, which is usually considered lucky; however, it seems there are a lot of lists of seven things that are negative. Whether it’s seven administrative sins, seven deadly sins, or the seven words you can’t say on television, there doesn’t seem to be a lot of lists showing seven positive things. I will therefore take it upon myself to list seven positive questions that should be asked of non-profit retirement plan sponsors.

  1. Does your organization’s management and board feel confident with the plan’s governance and their own responsibilities as plan fiduciaries? Too often in a non-profit organization, the management and board are not even aware that they are fiduciaries.
  2. Who is helping you with your fiduciary due diligence? The fact of the matter is that a typical non-profit is focused on its mission, and is typically not an expert on fiduciary duties related to its retirement plan. In fact some organizations believe their provider is handling that. Non-profit organizations are in need of help from qualified financial professionals.
  3. Do you have an investment policy statement and review process in place? This is part of prudent governance and a fiduciary best practice. It’s also surprising how many organizations don’t have investment policies in place.
  4. Do you have an education policy in place? Too often, non-profit organizations simply rely on vendor representatives selling product in the cafeteria. There is no consistency of messages, or direction from the plan sponsor.
  5. What challenges has your organization faced as a result of plan regulatory changes. The answers could range from administrative challenges coordinating information from multiple providers, so problems with Form 5500 and the annual audit.
  6. If your plan uses multiple providers, or has legacy plan assets with multiple providers, how do you coordinate appropriate administration? Challenges here range from the well-known problems with loans and hardship distributions, to lesser considered complications with QDROssmall amount force-outs, and beneficiary designations.
  7. How are you measuring the success of your plan? How are you ensuring that your plan is effectively getting your employees to save for retirement? A retirement plan should be making employees ‘retirement-ready’. Does the plan sponsor even know if the plan is effective?

The answers to these questions can tell you where a particular non-profit organization likely needs the most help with their retirement plan. Financial professionals are well positioned to help sort through the complexity. Otherwise we could be seeing non-profits drowning in the seven seas, when it would be easier to help get them to seventh heaven.

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