401(k) Investment Committees and Policy

[Guest D Ziegler]

Did your company establish a 401(k) Investment Committee to meet the 404© regs? What exactly does your committee do and how often do they meet? Who makes up your committee - did you include an outside, independent advisor? What Investment Policy did you create?

[Guest lmrice]

We have an investment committee to oversee our Money Purchase Pension Plan. We have about 10 members representing all levels of employees. They are required to meet at least once a quarter, but usually meet about 2 or 3 times. They follow the performance of the funds and help in the decision making process of bringing in new fund managers. We also have an Administrative Committee which is comprised of 3 officers who sit in with the Investment Committee. In addition, we have our outside financial advisor who attends all the meetings and gives his expertise. The investment policy is renewed each year.

[Jon Chambers]

We are an investment consultant, and we work with about 20 DC plan sponsors. In general, we report quarterly on performance and other fiduciary issues, most committees meet semi-annually, and simply review the report the other two quarters. We write investment policy for all clients. An IPS typically runs 12-15 pages. Below is a typical table of contents:

I. INTRODUCTION 1

A. PURPOSE OF THE PLANS 1

B. QUALIFICATION UNDER THE INTERNAL REVENUE CODE AND ERISA 1

C. GENERAL FIDUCIARY RESPONSIBIILITIES 1

D. PURPOSE OF THE INVESTMENT POLICY STATEMENT 2

II. ALLOCATION OF RESPONSIBILITIES 3

A. PLAN OPERATIONS AND POLICYMAKING DECISIONS 3

B. PLAN INVESTMENTS 3

C. THE CORPORATE TRUSTEE 3

D. RECORDKEEPING AND ADMINISTRATION 4

E. INVESTMENT ADVISORY FUNCTIONS 4

III. SELECTING INVESTMENTS 6

A. INTENT TO CONFORM WITH ERISA SECTION 404© 6

Broad Range of Investments 6

Core Investment Categories 7

Recommended Non-core Investment Categories 7

B. RATIONALE FOR SELECTING NON-CORE INVESTMENT CATEGORIES 7

Small Capitalization Stocks 7

International Stocks 8

International Small Capitalization Stocks 8

Value-Oriented Stocks 8

International Emerging Market Stocks 8

Global Fixed Income Securities 8

C. MODERN PORTFOLIO THEORY 9

D. RATIONALE FOR SELECTING PASSIVELY MANAGED FUNDS 10

E. SELECTING SPECIFIC FUNDS FOR INVESTMENT 10

IV. MONITORING INVESTMENT PERFORMANCE 12

A. COMPARISON WITH CATEGORY AVERAGES 12

B. COMPARISON WITH RELEVANT BENCHMARKS 12

C. MONITORING OTHER RELEVANT CRITERIA 13

IV. EXECUTION 14

APPENDIX A: DESIGNATED INVESTMENT ALTERNATIVES 15

A. CORE INVESTMENT VEHICLES 15

B. NON-CORE INVESTMENT VEHICLES 15

Committees generally have 3-10 members, including representatives from HR, Finance and Treasury.

Hope this helps,