Best Practices for Retirement Plan Sponsors



As fiduciaries, plan sponsors must take an active role in overseeing the plan, even when outsourcing. Here are examples of best practices for plan sponsors related to keeping all participants engaged and informed, avoiding the dangerous problems associated with missing participants, and ensuring protection for the plan, the company–and themselves.

Engaged and Involved Participants

Of course the whole point of a company sponsored retirement plan is to help employees save for retirement. The trend toward longer lives–and higher costs of living–makes the mission of retirement plans ever more critical. Clearly, participants who are actively engaged in the plan have the greatest chance for success. On the other hand, having participants and beneficiaries “missing” from the plan is counter productive–and in fact, a big problem in the eyes of the Department of Labor (DOL).When employees change jobs, relocate, or for whatever reason fall out of touch with the plan, sponsors are ultimately responsible for preventing them from becoming missing participants: “Communication extends to missing participants, who remain in a plan after separating from a company. The plan sponsor’s fiduciary responsibility remains, so it is important to take steps to keep in touch with employees even if they leave or retire by collecting personal contact information while they are still employed….” 

Indeed, as the DOL reminds us: “A major responsibility of all plan sponsors is ensuring that plan participants receive their benefits on schedule. Missing participants often pose challenges, so it is best to be proactive with efforts to curtail the associated problems.” Specifically, the DOL’s guidance on missing participants issued in 2021, instructs all retirement plan fiduciaries to:



  • Maintain complete and accurate census information.
  • Communicate with participants and beneficiaries about their benefit eligibility.
  • Implement effective policies and procedures to locate missing participants and beneficiaries.


Accordingly, it’s a wise idea to review the DOL missing participant guidance, which is provided in three parts, and available right here: Best Practices; Compliance Assistance; and, Field Assistance Bulletin

Diligent Communication

Most plan sponsors outsource plan services, including communications, to expert third party providers. Nonetheless, the choice of providers, and the supervision of the services received by participants remain fiduciary duties of the plan sponsor. As such, experts remind us that plan sponsors should be up to speed on best practices for keeping all participants engaged and informed: 


Fiduciaries must educate their participants about the plan and investments. Written notices will suffice but are a bare minimum and traditional education is not that successful, so thoughtful and creative approaches to education are desirable. “The more engaged the plan sponsor, the more engaged the participant and the greater likelihood of improving participant outcomes….It’s incredibly important that we lean into this idea of engagement.”

Keep in mind that the best retirement plan communications are tailored for the participants. Age, gender, race and ethnicity play a big role in our chances for retirement success, so efforts toward diversity, equity and inclusion should be reflected in all online and print communications. Imagery is of course important and research has found that the preferred communications of participants highlight:


  • Diversity of race and ethnicity as well as life stage and work setting, including retired singles, younger people and those working non-traditional jobs
  • Portraits of retirement as a physically active time with a broader depiction of retirement activities
  • Images of technology. Universally, respondents liked seeing the technology they use in their daily lives, such as tablets and smartphones
  • People actively working in retirement as retirees are increasingly choosing (or needing) to pursue part-time work in retirement


ERISA Bonds–and Liability Protection?

In Section 412, ERISA specifically requires retirement plan sponsors to obtain and maintain ERISA fidelity bonds to protect the retirement plan against acts of fraud or dishonesty. As a leading national  provider, listed with the Department of the Treasury, Colonial Surety helps plan sponsors ensure compliance, by opting for comprehensive, multi-year coverage, ensuring the ERISA bond remains Department of Labor compliant for the life of its term. 

It’s critical for plan sponsors to understand, however, that ERISA bonds do not protect them personally in the event of fiduciary missteps. To ensure protection for yourself and your business, Colonial Surety offers affordable Fiduciary Liability coverage: for a few dollars a day, you’ll have defense costs and penalty limits up to $1,000,000 if faced with alleged or actual breaches of duty in connection with the employee retirement plan. Cyber liability coverage is included at no extra cost, providing additional protection–for the plan and your companyagainst regulatory actions related to data and privacy, as well as expert response services.

At Colonial, adding Fiduciary & Cyber Liability Insurance to your ERISA fidelity bond is quick – login to your dashboard, click “upgrade” next to your bond, and get a quote. Our packages are available for 1, 2, and 3-year terms, providing flexibility and locked-in rates:


ERISA Bond+Liability Insurance HERE


Colonial Surety was founded in 1930 and continues giving customers the assurance that they, their businesses, and their clients are safeguarded with the right surety and insurance products at all times. We are a direct and digital insurer offering products through an online platform supported with exemplary customer service. We give customers a simple, direct, and instant service that takes the pain out of buying insurance and bonds. Colonial Surety is licensed in every state in the U.S., rated “A” Excellent by A.M. Best, and listed by the U.S. Treasury as an approved surety.