BEST PRACTICES: Investment Policies for Tax-Deferred Retirement Savings Plans Flashcards
Governing bodies of the tax deferred retirement savings plans should establish and adhere to a formal investment policy governing the selection and monitoring of investments made available by the plan.
What should governing bodies of tax deferred retirement savings plans establish?
A formal investment policy governing the selection and monitoring of investments made available by the plan.
What type of plans typically allow employees to make voluntary contributions subject to IRS limits?
457 deferred compensation plans, or similar plans.
What is the purpose of an investment policy in the context of tax deferred retirement savings plans?
To set broad policy parameters for the selection and monitoring of investments, acting as a long-term governing document.
How often should the investment policy be reviewed and updated?
At least annually and updated as deemed appropriate.
What are some of the legal restrictions that the development of an investment policy must adhere to?
Federal, state, provincial, and local laws, common law, and fiduciary standards.
What standards are decision makers expected to meet according to the investment policy?
A duty to govern the plan solely in the interest of plan participants, administer the plan in accordance with policies, and make a diversified range of investments available.
What should the investment policy statement of purpose include?
The rationale for having the policy and the investment goals for the plan.
What does the scope of investment options refer to in an investment policy?
The investment options available to plan participants.
What are Qualified Default Investment Alternatives (QDIAs)?
Identified default investment funds for plan participants who do not select investment options.
What should monitoring procedures include within an investment policy?
The frequency and manner of conducting a thorough assessment of the plan, including regulatory compliance and cost of investment options.
How are liquidity requirements addressed in the context of terminating a stable value fund?
Specifying circumstances under which a fee or impediment can be imposed by the fund stable value provider.
What is the role of participant education and outreach in an investment policy?
Identifying the frequency, responsibilities, and results of participant education and outreach.
