Does Your Company Have an Investment Policy Statement for Your 401K?

401K-employee-benefits-investment-policy-statementEmployee benefits can often be a confusing process, especially when it comes to retirement plans and 401k’s. One thing that can create a smoother process is adopting an investment policy statement as a sort of roadmap for your 401k offering. 

What is an Investment Policy Statement?

An investment policy statement (IPS) offers guidance for informed decision-making when it comes to investment plans.

The IPS identifies the investment goals and objectives of the plan, establishes how decisions will be made regarding the selection of investments and specifies the procedures for measuring investment performance.

Benefits of an Investment Policy Statement

While the law does not require that a plan adopt an IPS, it is very important for an employer to implement for a variety of reasons. By implementing, monitoring and revising all facets of the plan, the IPS provides a certain level of protection for the employer and fiduciary.

The investment committee is another critical component as they are responsible for performing the tasks, duties and obligations of the IPS review. The committee can be made up of those who participate based on job descriptions or purely on a voluntary basis. Regardless of the reason, all members share the fiduciary responsibility for making decisions on behalf of the members of the plan. Lastly, it is vital to meet at least annually for the investment review.

Many times an employer will introduce a retirement plan only to neglect and thus fail in the monitoring of the plan.

Are you looking for an employee benefits administration company that can help you with 401K policies or would you like to learn more about investment policy statements? Contact Cornerstone Insurance Group today.

Written by: Rodney Ragsdale, Vice-President at Cornerstone Insurance Group