Cyber for Plan Sponsors

Compliance: Year End Responsibilities



The end of the year is an important time for retirement plan sponsors to review plan documents and plan operations. Discretionary changes as well as amendments for compliance must be properly reflected in plan documents. Experts remind plan sponsors that checking in with service providers and reviewing communications to participants are also best practices as the year winds down.


Changes Made To Plan?

For retirement plan sponsors, year end means it’s time to “button up” on any changes that have been made to the plan. As Elizabeth Drake, a principal at Groom Law Group sums up: “The most significant end-of-year responsibility for plan sponsors is to ensure that any changes made to plan design, contribution rules and/or distribution provisions, including any in-service withdrawals for employees, is reflected in the plan documents.”

Indeed, many retirement plan sponsors have been thoughtfully engaged in plan design adjustments to address the shifting needs, interests and concerns of participants—and provide benefits that aid in the recruitment and retention of talented staff. Experts remind us to ensure changes are addressed in plan documents:


These discretionary changes may include plan design changes…changes in plan administration impacting the plan document, and changes to plan provisions pursuant to collective bargaining agreements.  An earlier deadline applies to plan sponsors who choose to adopt a 401(k) safe harbor plan design for 2022, using a 3% nonelective contribution.  The safe harbor plan provisions must be adopted, and disclosures provided to participants, at least 30 days before the end of the plan year (e., by December 1, 2022 for calendar year plans).


ERISA experts also remind plan sponsors to carefully review plan operations

“to determine whether conforming plan amendments may be required” and offer detailed information on amendments here. If reviewing plan documents and operations reveals the possibility on non-compliance, obtaining legal guidance and proactively utilizing the Employee Plans Compliance Resolution System (EPCRS) (Rev. Proc. 2021-30) is the recommended course of action.


Adherence to legally required participant communications is essential throughout the year—and year-end is a good time to review for accuracy. Examples of required communications include 401(k) safe harbor notices, QDIA/automatic enrollment notices and fee disclosures. The Groom Law Group reminds plan sponsors to ensure notifications “are compliant in form and are being provided by the applicable deadlines using the appropriate delivery method.  Plan sponsors should also review participant communications, and remember to provide an updated summary plan description (or summary of material modifications) for any material plan changes within 210 days after the end of the year.”


Running a well run employer sponsored 401k plan keeps plan sponsors busy all year round—and even with great care, comes with the inherent risk of a fiduciary breach. That’s why Colonial Surety is here to help with an affordable Fiduciary and Cyber Liability Insurance Package that arms plan sponsors with:


  1. Legal defense and coverage for penalties against claims of alleged or actual breaches of fiduciary duties.
  2. Defense against lawsuits and regulatory actions related to a cyber breach.
  3. Expert-led response, notification and crisis management services to prevent a cyber incident from spiraling into a disaster.


The  annual cost of this Fiduciary with Cyber Liability Package is less than the fee for one hour of expert legal defense if a lawsuit or regulatory challenge strikes. Get covered in minutes, today:  Fiduciary with Cyber Liability Package.


Strong Administrative Policies

In addition to ensuring that changes—whether required or discretionary are reflected in the plan document, plan sponsors should also take time at the end of the year to review, update or put in place strong administrative policies. Foley & Lardner  point out that a variety of policies are required under ERISA or via specific Department of Labor guidance, while other policies, though not required are critical in the event of government audits or participant lawsuits. Lawyers suggest: “Having clear policies and procedures in place also helps employees involved in plan administration do their job more efficiently by mapping out appropriate steps to take when various situations arise.” In addition to an investment policy, it is advisable for 401(k) plans to also have these policies and procedures: Investment Policy; Loan Policy; QDRO Procedures; Cybersecurity Policy and Procedures; Missing Participant and Uncashed Check Procedures.


Good To Do: Renew!

As the year ends, it is also essential for plan sponsors to ensure their ERISA bond is current and adequately covers the plan. The DOL mandates ERISA fidelity bonds to protect the assets of the retirement plan from theft. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered. Additionally, plan sponsors can opt for cost-saving multi-year coverage, ensuring the ERISA bond remains Department of Labor compliant for the life of its term.


Obtain or Renew Your ERISA Fidelity Bond Here Now.


Pension plan professional? We’re here to help you with your plan sponsor clients—and we’ve got you too. From  Errors and Omissions Insurance to Fiduciary Liability InsuranceEmployment Practices Liabiity Insurance–and more, we’re HERE with the coverages pension professionals need to keep the business going—and growing. Insurance for Pension Professionals Right Here.


Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.