Every football team needs a backup quarterback. You hope you never need him, but you better have one ready because eventually the starter is going to miss a play, a game, or maybe a season.<\/p>\n
Your 401(k) plan needs the same thing.<\/p>\n
I\u2019ve seen too many plan sponsors where one employee knows everything about the 401(k) plan. They know the payroll process, when contributions are deposited, who the TPA contact is, where the documents are located, and what needs to be sent for annual testing.<\/p>\n
Then that person quits.<\/p>\n
Suddenly, nobody knows anything.<\/p>\n
The problem with a 401(k) plan is that the clock doesn\u2019t stop because your benefits person left the company. Payroll still has to run. Employee deferrals still need to be deposited timely. Eligibility still has to be determined. Distributions and loans still need attention. Annual testing and Form 5500 deadlines aren\u2019t going anywhere.<\/p>\n
That\u2019s why every plan sponsor needs a backup quarterback.<\/p>\n
At least one other employee should understand the basic administration of the plan. Important procedures should be written down. Provider contacts should be available to more than one person. Plan documents, amendments, policies, committee minutes, and important correspondence should be stored somewhere accessible to the appropriate people.<\/p>\n
Cross-training isn\u2019t just an HR issue. For a 401(k) plan, it\u2019s risk management.<\/p>\n
Your backup doesn\u2019t need to know every detail that your primary plan administrator knows. They need to know enough to keep the plan operating and know whom to call when they don\u2019t know the answer.<\/p>\n
Tom Brady rarely missed a game, but the Patriots still carried backup quarterbacks.<\/p>\n
Your 401(k) plan should too.<\/p>\n
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