A new year is under way, and with it comes an opportunity to assess and analyze your business's qualified benefit plans. Retirement plan rules are always changing, as are the business environment and workers' expectations of benefits. It's important to ensure your plan complies with IRS rules and is still designed to attract and retain the kinds of workers you need.

The beginning of the year is the ideal time to think about the following big-picture issues and benefit plan questions:

  • What is your organization's philosophy toward providing retirement benefits for its employees? Are you looking to provide benefits that are simply "industry standard," or do you view your plan more strategically regarding how it may help you compete for and retain talent? 
  • Do your plan's provisions and contribution types support your organization's overall retirement philosophy? For example, defined benefit plans have been less popular in recent years but can still make sense for entities that rely heavily on experienced personnel who find more value in this plan design. If you conclude that a Section 401(k) plan is in your best interests, does the matching contribution formula provide the right level of incentive for employees to meaningfully contribute toward their own retirement security? Perhaps a 50 percent match on the first 10 percent of pay contributed might make more sense than a dollar-for-dollar match on the first 5 percent. 
  • Have you benchmarked your plan recently to see how it stacks up to the competition? There's a lot more to a plan than vesting schedules or matching formulas, and some quick, relatively inexpensive benchmarking can help you determine if your plan is lacking in any areas — or more importantly, if the levels and kinds of benefits it's providing align with your expectations and philosophies.
  • Does your plan include terms that have caused or continue to cause administrative headaches? While reading a qualified retirement plan document may not be the most invigorating weekend activity, you can get a very good return on your investment of time by better understanding how your plan should be operated. Fixing operational errors is much more expensive and time-consuming than preventing them (ask a plan sponsor who has recently undergone a voluntary correction program submission with the IRS). It can be dangerous to rely solely on your plan's administrator and other advisers. There are countless examples of third-party plan administrators who misinterpret a plan document or don't complete the required discrimination testing on time. If you have at least a foundational understanding of the rules, you can pressure your service providers to keep things running as they should.
  • Let's face it, investments and related investment fees are key to the overall success of a retirement plan, so this should be a focus. The Department of Labor (DOL) has issued all kinds of new rules regarding fee disclosure. Section 401(k) plan participants will soon see what they are paying for their accounts in much starker detail. If you don't already have an investment policy statement for your plan, work with an investment adviser to put one in place and make sure you're following it and updating it periodically. Carefully document all your plan fiduciary discussions and decisions. Contrary to some rumors, the DOL does not expect perfection from plan sponsors. You will get a lot of credit for "showing your work."

Just because your plan worked two years ago, doesn't mean it's still perfect for today. It's important to confirm that your plan complies with any new rule changes, including those mentioned previously. It's also important to make sure your benefit plan hasn't become stale — that it still includes a level of incentive appropriate for the economic environment and desired workforce. Retirement plan design and operation should be an ongoing process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.