Why You Need a RPOC

 

A Retirement Plan Oversight Committee is a wise and effective way to help ensure that the legally mandated oversight requirements are being met.

The new IRS 403(b) regulations have been touted as the most significant piece of legislation in the last 40 years for 501(c)(3) organizations. They have radically changed how employers must interact with the retirement plan they offer to their employees. When the new IRS 403(b) regulations were announced in 2007, the objective of the regulations was to reduce the extent to which 403(b) plans differ from other salary reduction arrangements, such as 401(k) plans. One key theme of the new regulations is oversight.

A Plan Sponsor must know what is happening in their retirement plan. They must be able to demonstrate that they provide supervision, control, and administration. Do you know what is happening with your plan? Are there adequate controls in place to assure that your plan is being administered within the framework of your plan and the law? For example, are there any participants contributing more to the plan annually than what the law allows?

A Plan Sponsor must know what is happening in their retirement plan. They must be able to demonstrate that they provide supervision, control, and administration.

There are two primary reasons for Activating and Maintaining a Retirement Plan Oversight Committee

1. Legal protection for the organization
2. Increase the value of the organizational investment in the retirement plan

Legal protection

With the changing regulatory landscape, Plan Sponsor responsibility for the retirement plan grows. There is the responsibility to both provide oversight and to be actively engaged in the plan’s operation and delivery.

The activation and consistent operation of a Retirement Plan Oversight Committee concretely demonstrates your commitment to both oversight and engagement. It meets the test.

Increase value

Effective, Efficient, High-Impact

Good stewardship of the Plan through wise oversight and engagement results in three main benefits and increased value:

1. Increased Effectiveness
2. Increased Efficiency
3. High Impact

1.  Increased Effectiveness

1. The Committee’s work will produce a greater rate of return on the monies and effort invested by the organization in the plan.
2. The Committee’s work will result in greater consistency and continuity of messaging resulting in better understanding and appreciation of the plan.
3. Over time, measurements of effectiveness can be can be developed to enhance the ability to evaluate and make changes as indicated.

2.  Increased Efficiency

1. A formal process, consistently conducted, is the most efficient and systematic way to increase programmatic value.
2. The systematic process of review, evaluation, and change can actually happen when a Retirement Plan Oversight Committee is operational.
3. The time and effort of engagement is reduced by having a regular, consistent process in place. With Envoy driving the process, your organizational effort is minimized.
4. Being led by the internal Plan Administrator, communication between the Committee and Envoy will be maximized. This open communication will enhance the efficiency of plan operations and take steps to assure that all available services are known and utilized.

3. High Impact

1. It demonstrates to your staff that you both understand the importance of the subject and your care about them.
2. It demonstrates that the retirement plan is more than just Investments. It includes the information, education, and encouragement inherent in a plan.
3. The Retirement Plan Oversight Committee composition brings a variety of points of view the process. A diversity of perspective is present, not just that of those who are both comfortable and skilled in this area. It helps address the needs of the average participant, not just the experienced or knowledgeable participant.
4. Through the review process, broader organizational issues will surface and can be brought to the attention of the organizational leadership team.

A Plan Oversight Committee makes good sense for your organization and your participants. To design the perfect retirement plan for your ministry, click here to try Envoy’s exclusive Blueprint Retirement Plan Builder.

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