Investment Policy

The Department of Labor has stated that documentation, such as an Investment Policy Statement, is key to demonstrating that plan fiduciaries are following their Employee Retirement Income Security Act of 1974 (ERISA) responsibilities.

A retirement plan’s investment policy sets the goals and objectives of the plan trust. It is a written reference regarding the types of investment vehicles, investment objectives, monitoring processes, diversification interests, and other plan investment management areas.

Selecting and monitoring investments is an important fiduciary function. ERISA does not set forth the content of a particular Investment Policy, only that a Plan must have one and it should be in writing.

The Investment Policy is a communication tool. As a policy statement, it can describe the objectives being sought, consider the needs of participants (investment and investor demographics), the roles/responsibilities of those providing oversight, and other Plan-specific guidelines for investing plan assets.

We believe a Plan’s investment policy should be drafted as a guide, and with sufficient language to be descriptive and usable, while flexible enough to satisfy the changing needs of both the company and regulations.

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