Plan Administration Introduction
Plan Administration is concerned with the ways we create our plans and structure the services we provide. Think of Plan Administration as if you were setting up a small business, like a bakery shop. To get your bakery started you need to create the legal structure (by determining what type of tax entity it will be, obtaining licenses and permits, etc.), identify the products you’ll be offering (cakes, pies, bread, etc.), and determine the extent to which you’ll be using internal or external resources to get things done (e.g. making your own pies versus contracting with a pie-maker).
We follow essentially the same path with our defined contribution plans. We create the plans within the legal structures by which we are governed, decide what services will be offered, and evaluate whether we’ll be doing the work ourselves or entering into contracts with experts. Later sections of our guide will examine some of the more complex issues with plan administration in greater detail, so be sure to check out all of our Best Practice Guides.
The “you” that creates a defined contribution plan is referred to as a “Plan Sponsor.” The plan sponsor is responsible for not only creating the plan but defining the rules under which the plan will operate (within the limitations imposed by law). Use this Best Practice Guide to create a defined contribution plan that will allow your public sector employees to retire securely.