Prepare an IPS

Every good plan needs a roadmap.

And...so it is with a 401(k) retirement plan. As the plan sponsor, you need to prepare an IPS—an investment policy statement. Think of it as a financial procedure manual.

In it, you will
 
• Define duties and responsibilities of the participants.
• Identify performance outcomes you wish to achieve
  and rationale for selection.
• Describe method/s used to select and monitor
  investments.
• Define criteria used to evaluate performance.
• Describe method/s used to rebalance investments.
• Describe method/s used to control and account
  for investment expenses.

A comprehensive IPS is more likely to be in compliance with participant and Department of Labor law.

Developing one takes concerted thought and effort. It may help to take look at a sample IPS. Keep in mind that an 'absolutely perfect' IPS may not exist. In fact, you will find a variety of ideas on what it should contain and how it should be written. A good rule to follow: Have your attorney review the IPS before you implement it.