Four best practices for managing 457(b) fiduciary obligations

Certain strategies may effectively help a governmental plan sponsor meet its fiduciary obligations, while also conveniently lending some administrative support. These solutions won’t relieve plan sponsors of their fiduciary duties, but they may help a plan sponsor more effectively satisfy its plan administration and oversight obligations.

 


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Consider consolidated recordkeeping

While the availability of multiple providers may give plan participants access to a deeper bench of investment options, it also may open up plan sponsors and participants to a multitude of issues, such as higher cost, inconsistent participant education, increased fund monitoring requirements and complex plan administration. Consolidating providers may eliminate administrative redundancies and may provide participants with better education and lower cost.

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A knowledgeable committee

Selecting committee members with knowledge of fiduciary responsibilities—or at least the willingness to become more informed—is key. Committee members should commit to scheduled meeting dates to allow for thorough discussion.  As fiduciaries, plan sponsors may bear responsibility for training committee members and ensuring that they fully understand their obligations to make decisions prudently and in participants’ best interests.

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Internal controls

Although the plan can hire a record-keeper and third-party investment managers to shoulder a significant portion of plan administration and investment management, the plan sponsor remains obligated to oversee the plan. This includes instituting processes and procedures designed to reduce errors and inefficiencies; reviewing the plan document and Investment Policy Statement (IPS); and periodically evaluating the performance of all third-party service providers.  

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Comprehensive fiduciary compliance files

Keeping good records of your decision-making and procedures may be an invaluable way to document a plan sponsor’s decision-making process in meeting its fiduciary obligations. That means maintaining a consolidated repository of plan documents, trust agreements, plan forms, procedures, third party service agreements and contracts, the Investment Policy Statement (IPS) and all related amendments. Knowing where and how to locate these documents can help the plan sponsor feel more confident as a fiduciary and can lend support to their prudent decision-making.



Fiduciary Checklist for 457(b) Governmental Plans

Use our checklist  to assess a plan’s compliance with many common fiduciary standards, issues and best practices.

At Lincoln Financial Group, we work closely with governmental plan sponsors and their consulting partners to help them effectively navigate their fiduciary responsibilities.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.