Insights

When “JoAnn” accepted an internal promotion to CFO, she also accepted appointment to become a voting member of the employer’s retirement plan committee. In her previous position as Controller, she had been invited to attend retirement plan committee meetings as a non-voting member and encouraged to share her thoughts and opinions at meetings on various topics. At the committee’s next quarterly meeting following promotion, she cast the deciding vote favoring the investment advisor’s recommendation to remove an existing fund from the core lineup and replace it with a similar fund. After the meeting, JoAnn reflected on her vote and the importance of her actions. 

Appointing members to a retirement plan committee is an important matter for plan sponsors. Members should be knowledgeable individuals who bring a mix of fiduciary responsibility, relevant expertise, and commitment to retirement plan oversight. They should be fully aware of their fiduciary duties and ready to act in a prudent manner for the exclusive purpose of benefiting the plan participants and beneficiaries.

On occasion, inherent conflicts arise between the plan sponsor and the plan. Committee members are responsible for adhering to the rules and regulations of ERISA. Thus, when a member votes on a matter presenting conflict, the member is expected to separate corporate responsibilities from fiduciary obligations and cast an informed vote as plan fiduciary. When matters like these arise, a best practice for the member is to review the committee charter, especially around purpose and administrative duties. 

The ideal committee member has knowledge of - or a capability to quickly learn - the basics of plan operation and fiduciary governance. This includes a broad knowledge of ERISA rules, an understanding of the plan document provisions, an understanding of the different types of service providers including their ability to serve in a fiduciary or non-fiduciary capacity, and a familiarity with investments, investment markets, and their related costs. The ideal committee member combines these facets in a meaningfully manner, is fully engaged, and helps the committee make informed decisions.

In the opening paragraph, JoAnn had an unusual but excellent advantage. She had been invited to committee meetings to engage in dialogue before her appointment as a formal voting member. Most committees only have voting members. It’s rare, but not completely uncommon, for committees to invite certain individuals as non-voting members. Non-voting members may be invited to not only learn but to actively share information and opinion on daily matters that help voting members with their fiduciary responsibilities. 

What do you do as a retirement committee member?

Securities offered through M Holdings Securities, Inc., an unaffiliated registered broker-dealer, member FINRA | SIPC. Investment advisory services offered by HORAN Wealth, LLC, registered with the U.S. Securities and Exchange Commission. Not FDIC Insured | No Bank Guarantee | May Lose Value