In the next edition of “Ask Erick”, we discuss a rapidly growing trend in the retirement plan industry… adding social awareness funds to your 401(k) Plan lineup.
 
Q: Hey Erick! We are interested in adding socially conscious investments to our 401(k) plan menu, and we’re wondering if there is anything special we should know about how to choose the right ones.
 
A: In selecting any investment, socially conscious or otherwise, the key phrase is the same one you should apply to any decision for your plan: process documentation.
 
Whether you’re selecting an investment, a provider, or anything else, it’s always smart to document how you arrive at your decisions, because it can be used as evidence that your process is sound — even if the results aren’t what you hoped they would be. Interestingly, there is some discussion recently about the DOL requesting lots of documentation from plan sponsors to justify their socially conscious investment choices.
 
Plan sponsors have been asked for as many as 13 types of support documents in the process, according to the cited article. By carefully crafting an Investment Policy Statement, for example, you should be able to handle any inquiries that come about as you add socially conscious funds to your lineup. Great question. Thanks for asking!
 

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Disclosures:

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com

©2020 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.

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