The Plan Committee (Part Two): What Are Committees Responsible For? 

Last week I outlined the reasons for establishing a plan committee. In this week's post I'll describe the matters committees handle. But before I do that, it’s useful to understand the committee’s place in a plan’s power scheme.

Committees are at once servant and master.

Committees serve at the pleasure of an appointing entity, usually a board of directors that gives them discretionary authority over key aspects of plan operations, investments, and administration. Committees are accountable to that appointing entity for their actions. In other words, they are servant. Committees use their authority to hire and oversee the performance of plan service providers and to make decisions about important matters and direct their implementation. In this sense they are master.

The overarching goal of a plan committee is to make sure that issues that are important to its mission are brought to the surface for resolution at the appropriate level.

A good way to think of a committee’s role is to think of the relationship between a corporate board of directors and management. Management is responsible to and reports up to the board. Management also implements its decisions by directing down and causing the execution of it decisions through the organization. The key difference is that a committee owes an exclusive duty of loyalty and care to plan participants and beneficiaries.

Want to know if your plan committee is on track? We've put together this simple calendar checklist to help you decide.

Let’s discuss what committees are responsible for specifically.

I divide a committee’s work into six key areas of responsibility requiring the committee’s attention at least once each year. They are:

Administrative Matters

This includes a broad swath of plan related activities:

  • Review of coverage &discrimination & top heavy testing results
  • Participant loan & QDRO policies & procedures & implementation
  • Participant distributions accuracy & timeliness
  • Participant communications & required notices & disclosures
  • Investment education efforts
  • ERISA bonding
  • Plan interface with participants, including plan website & call center


Investments are of course central to a plan’s mission of producing retirement savings for participants. Although 401(k) plans almost always provide participants with the authority to investment their own accounts under ERISA section 404(c) in order to shield plan sponsors from liability, plan sponsors are at risk if they don’t adequately select (qualify) and monitor the investment fund options they provide for the reasonableness of fees, style drift and other factors. This is often done (recommended) with the aid of an investment policy statement drafted with the assistance of a knowledgeable investment adviser. Some, typically larger plans, establish a separate investment committee for this function.

Service Providers

Service providers, in particular, recordkeepers, TPAs, and plan sponsor HR areas are the worker bees of plan administration for the simple reason they have the systems, infrastructure and expertise plan sponsors and committees don’t have. But plan committees have significant and crucial oversight responsibilities. Plan committees should have two main concerns when it comes to these folks:

  • Are they doing a good job?
  • Are their fees reasonable & do those fees continue to be reasonable?

For example, recurrent problems may indicate a service provider needs to fix the source of the problem or if it can’t or is unwilling, be replaced by the committee. But these problems may not reach the committee if a process or procedure is not in place that does that. Thus, the establishment of periodic reporting up to the committee and effective lines of communication is essential to the committee’s ability to do a good job.


Annual Reporting

Every year plan administrators must file under penalty of perjury an information return (Form 5500) with DOL for the previous year. These returns contain all kinds of important information about the plan including participation data, plan assets, fee information, prohibited transactions, and bonding. If the plan has more than 100 participants, the return must be accompanied by an accountant’s opinion. The first and quite obvious challenge is the need for accuracy in the return. The second challenge is to get the return filed on time. These challenges can be significant if return preparation is not moved forward in a thoughtful and deliberative way. For example, the preparation of a return can be hindered by the failure to get necessary information to the return preparer or by the return preparer itself. Last second preparation and review and signoff on a return is never a good idea.

Plan Amendments and Documentation

 Plans are amended for two main reasons: because they have to be amended for changes in the law or because the plan sponsor wants on its own to make a change. The authority to make plan amendments is not generally in the authority of a plan committee (although I have seen that authority delegated to committees for non-material amendments in larger plans). They are authorized and approved by a company’s board of directors. Nevertheless, committees are often central to the amendment process. In the case of required amendments, committees keep track of the legal and regulatory developments and communicate the need for required amendments to the board of directors. Committees often play a central role in recommending to boards discretionary amendments to the provisions of their plans. There is good reason for this. A well-run committee at all times has its fingers on the pulse of the plan.

Regardless of the reason for an amendment, a cascade of things to do can result from an amendment, including changes in employee communications, SPDs, disclosures, websites, payroll systems, and other things. Plan committees make sure these things actually get done.

Plan Effectiveness

Plan sponsors generally establish their plans with certain objectives in mind. Plan committees are generally in the best position to evaluate whether the objectives are being achieved. Are employees electing to participate in the plan by making salary deferrals? Are they deferring enough to realize retirement savings goals? Are they maximizing the opportunity for employer matching contributions? Are they investing appropriately based on age and financial profile? Are participant investment education efforts adequate or do they need to be revamped? 

Want to know if your plan committee is on track? We've put together this simple calendar checklist to help you decide.

For a comprehensive discussion of ERISA fiduciary responsibilities and valuable day-to-day resources, there is the Fiduciary Responsibility eSource. Learn more at



Chuck Humphrey is principal of Law Offices of Charles G. Humphrey, a firm concentrating its practice in the field of employee benefits and fiduciary law. He is the author of the Fiduciary Responsibility eSource available at