Should Plan Policies Be Put in Writing? You Bet and Here’s Why!

By Bob Herdoiza

When it comes to managing a workplace retirement plan, it seems like we’re always telling you to document everything. Decisions, policies, procedures; you have to write everything down. But, as a preschooler would ask, why? Why is it so important to have everything in writing?

Administrative Efficiency

First of all, it’s a lot easier to run a plan well when things are in writing. Without documentation, you are too reliant on key employees who usually do the work. What happens if they are out sick? Or terminate employment? With things in writing, everyone has access to the necessary knowledge to run the plan. 

Having policies in writing also helps keep everyone on the same page. Much greater efficiency can be achieved when team members are doing things the same way and following the same process. Without written instructions there is no cohesion, everyone does things their own way, and chaos ensues. Having documents in writing provides a roadmap for everyone involved to follow so that work can flow seamlessly from one person to the next.

Inform Participants

The law mandates many different disclosures and notifications to retirement plan participants. Also, people are better able to get the most out of their retirement plan if they know what’s going on and how it works. The best way to provide these communications is through writing. Written documents ensure that every person receives the same information and enables them to keep that information to reference later.

Many participants are intimidated by choosing investments. The more information you can provide, the more comfortable they will be and the more they will benefit from their participation in the plan. Having the information in writing also makes it easier for workers to pass on the information to their spouses or others that help them make financial decisions.

Maintain Compliance

As mentioned above, some things need to be in writing simply because the law says so. If you fail to maintain the requisite documentation, you will be out of compliance and subject to fines, penalties, and lawsuits. In any kind of ERISA litigation, your best defense comes in the form of written policies, procedures, decisions, and processes.

Things That Should Be Written

There are a number of things that need to be written down for your retirement plan on the administrative side. The first is the plan document, which gives guidelines on the administration of and participation in the plan. Although not required, if you utilize, and we recommend the use of, an investment policy statement needs to be written as well. Further, documentation of how and why decisions are made should always be done in writing. 

There are other items that are required to be in writing for the sake of the plan participants. They need a summary plan description, summary of material modifications, and summary annual report. Most of their written documents are summaries because few plan participants are interested in reading the complete plan documents.

I know that it can be a bit overwhelming to administer a company retirement plan, given all the documentation nuances as well as deadlines. That’s why many plan sponsors choose to work with a retirement plan professional. At Stonebridge Financial Group, we work exclusively with retirement plans and can help you with everything from designing to running your plan. Send me an email at [email protected] or call my office at (855) 530-0500 so we can discuss how we can make your life easier as you run your company retirement plan.

About Bob

Bob Herdoiza, AIF®, started his career as a CPA auditing retirement plans and is a Partner at Stonebridge Financial Group, a registered investment advisory firm. Stonebridge seeks to help clients build and manage highly effective, successful retirement plans. Bob also served as President of CEBOS for more than 15 years where he managed his company’s retirement plan before joining Stonebridge Financial Group. He takes pride in his firm’s 98% client satisfaction rate (according to a 2017 client survey) and individualized implementation approach. Learn more by connecting with Bob on LinkedIn or visiting