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Investment Policy Statement for Employee Benefit Plans

Apr 30, 2015

Top Employee Benefit Plan Tips for May

May provides a perfect opportunity to evaluate and review your employee benefit plan’s investment policy statement with the plan’s investment advisor.  The plan’s first quarter investment performance results are available by now and the plan’s investment advisor is eager to meet with plan fiduciaries to discuss the results. 

If your employee benefit plan does not have an investment policy statement, you “May” be (pun intended) asking yourself, why should we have an investment policy statement (“IPS”)?  As a plan fiduciary, you are responsible for diversifying plan investments.  An IPS is a road map that provides plan fiduciaries with criteria and procedures for selecting, monitoring, and evaluating investment options and investment performance.  It also describes ways to address investment options and investment managers that fail to satisfy established objectives.  Overall, the IPS provides guidelines and support for crucial investment related decisions made on behalf of the plan. 

Once established, the IPS should be monitored and reevaluated on a regular basis.  In addition, the IPS should be compared to the plan document to ensure they are in alignment.  Now that you have established policies and procedures in place, don’t forget to document the investment decisions made on behalf of the plan.  One way to do so is to maintain minutes of all meetings held.

Recap of Top Employee Benefit Plan tips for May:

  • Meet with the plan’s investment advisors to review the plan’s investment performance
  • Discuss implementing an investment policy statement 
  • Monitor and reevaluate the investment policy statement
  • Document investment decisions made on behalf of the plan

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Denise Finney

Denise Finney is the Partner-in-Charge of the Pension Services Group dedicated to employee benefit plan audits. With 15 years of public accounting experience, she specializes in assisting clients with annual audit requirements regarding employee benefit plans.

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