Providing A Prudent Process For Evaluating And Monitoring Your Defined Contribution Plan

Capital Cities has long recognized the need in the middle market to provide institutional caliber services to plan sponsors with plan assets less than $500 million dollars. Capital Cities has joined forces with Callan Associates Inc., one of the largest investment consulting firms, through our membership in Callan's independent advisor group. Callan has been providing investment consulting services to the institutional market place for over 30 years. Callan currently consults to over 325 clients representing nearly $1 trillion dollars in plan sponsor assets.

Utilizing Callan's deep resources, Capital Cities' defined contribution (DC) plan services program provides the depth of knowledge and resources to assist you in discharging your fiduciary responsibilities as a DC plan sponsor. From plan review and fee analysis to manager/fund selection and monitoring, Capital Cities has assembled the expertise to guide you through all phases of the DC plan management process.

Capital Cities' Services for Structuring, Implementing and Monitoring Your Defined Contribution (DC) Plan

Defined Contribution Plan Review

Capital Cities' Defined Contribution plan review provides an in-depth assessment of your plan and service providers. This assessment helps identify any inconsistencies between your objective and policies and the program's current positions. Our plan review encompasses five primary areas:

• Investment policy review to make sure the guidelines in place will continue to reflect your goals and objectives for the plan.
• Investment structure evaluation to identify any gap or overlap in the current manager structure/mutual fund lineup.
• Recordkeeper review to assess the provider's competitive position in the marketplace.
• Trustee/custodian review to assess the trustee's services and fees in light of industry standards.
• Fee analysis to make sure you have an understanding and documentation of the fees incurred by the plan and participants.

Policy Statement Review and Construction

Once our analyses of these five core elements are complete, we can then assist you in drafting a plan policy statement or in reviewing and revising your current statement. This formal document states your service objectives, as well as the roles and responsibilities of all of your plan providers (e.g., recordkeeper, trustees, investment managers, consultant). We will also make sure that your plan policy statement includes appropriate investment policy language, in order to prepare for compliance with ERISA and associated fiduciary, procedural prudence, and due diligence requirements.

Defined Contribution (DC) Plan

Policy Implementations

Capital Cities takes a customized approach to search and selection, utilizing proprietary databases to help identify appropriate investment managers and funds, recordkeepers, trustees/custodians, and participant advice providers. In every search, Capital Cities employs the following critical steps:

• Plan and Client Profiling — Before we embark on a search for any investment fund or service provider for the plan, we work to fully understand your objectives and selection criteria. For fund selection, your objectives and criteria will probably include parameters around style or asset class, as well as performance objectives. For a recordkeeper search, your criteria may focus more heavily on certain functional areas, such as systems and technology or employee education and communications capabilities. These profiles help to ensure that we provide the most appropriate alternative for your consideration.
• Candidate Identification — Capital Cities then identifies candidates using our experience in the marketplace and the comprehensive, up-to-date information contained in the Callan databases. These databases cover:
  
  
  • Managers/Funds — Callan's extensive manager search database includes information on styles, investment processes, organizational strengths and stability, and consistency of performance. Our combined focus is on ensuring that all candidates are well suited to your overall DC plan investment strategy.
  • Recordkeepers — Callan maintains relations with major provider organizations through annual on-site due diligence review, regular meetings at Callan's offices, and ongoing correspondence, as well as through their submissions to Callan's provider database.
  • Trustees/Custodians — We also have dedicated resources you can call upon to assist in selecting a new trustee/custodian or to review custody arrangements and securities lending programs.
  • Participant Advice Providers — While your recordkeeper probably has relationships in place with preferred advice providers, we can help you evaluate the methodologies employed by these organizations. Documenting advice givers' processes is becoming an increasingly important area for plan fiduciaries to address.

Transition Management

Changing any element of your defined contribution program can be time consuming for all involved. Capital Cities takes a hands-on approach in helping manage these transitions, whether they involve a conversion between recordkeepers, a change in trustee/custodian, or the addition or replacement of investment options. Transition management is also valuable in merger and acquisition situations, where an asset mapping strategy should be implemented.

Ongoing Evaluation

Capital Cities provides ongoing DC plan evaluation to ensure that plan sponsors continue to have the knowledge and information necessary to meet their fiduciary responsibilities. We provide quarterly performance measurement reports, including analyses of the current capital markets and a comparison of performance within each peer group. These reports can be delivered via hard copy, or electronically.

Our ongoing monitoring also encompasses the plan's service providers to ensure that their servicing levels, product development, and fees remain competitive. We will conduct an annual evaluation of your recordkeeper and trustee/custodian within the context of industry developments.

Education for DC Plan Sponsors

One of Capital Cities' primary goals is to provide valuable, continuing education to those engaged in the investment decision-making process. To serve that mission, Capital Cities offers educational forums where attendees have an opportunity to expand their knowledge of plan sponsor responsibilities and procedures. Topics covered include:

• Fiduciary responsibility and procedural process
• Developing an effective policy statement
• Implementing a DC plan policy statement and investment policies
• Monitoring and controlling the DC investment program

We can customize a one-day session to help your DC plan oversight committee address your specific issues and concerns.

Weekly Defined Contribution eNewsletter

Capital Cities offers a Weekly Defined Contribution eNewsletter to assist fiduciaries of Defined Contribution plans in better managing their responsibilities by staying abreast of current issues facing the defined contribution market place. If you are interested in receiving our weekly correspondence please email us at info@capcities.net.

Please browse our growing library of past eNewsletters.

Capital Cities 401k Library

• Retirement Rollover Chart
  A chart of what the Internal Revenue Service regards as permissible when rolling funds over from one type of retirement account to another.
  
• Pension Plan Limits For The Tax Years 2002 - 2008
  On October 18, 2007, the Internal Revenue Service announced cost of living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2008....
  
• What is a 401(k) plan? Here Is a Quick Overview
  Employer-sponsored retirement plans are generally grouped into two major categories....
  
• Pension Plan Limits For The Tax Years 2001 - 2007
  Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. It also requires that the Commissioner annually adjust these limits for cost of living increases....
  
• Are You A Fiduciary?
  The Employee Retirement Income Security Act (ERISA) imposes four particular standards on 401(k) plan fiduciaries. These four standards are....
  
• The Basics On The Catch-Up Contributions Allowed In 401(k) Plans
  Congress added the new catch-up contribution option to retirement plans out of concern that baby boomers hadn't been saving enough for retirement. This new option enable savers age 50 and over to increase contributions....
  
• Common Questions and Answers Relating to Investment of 401(k) Plan Assets
  What is a plan fiduciary? Who is responsible for investment decisions made by plan participants? more....
  
• Investment Education or Investment Advice: Which Are You Providing?
  According to the Profit Sharing/401k Council of America's "46th Annual Survey of Profit Sharing and 401(k) Plans," investment advice is offered in 51.9% of the 401(k) plans surveyed....
  
• ERISA Quick Compliance Checklist
  Plan administrators and other plan officials can use this checklist as a quick diagnostic tool for assessing a plan's compliance....
  
• How To Increase Employee Participation
  How can you increase participation in your plan? All major studies show a 401(k) plan is more appealing if you....
  
• Investment Committee Checklist
  The Investment Committee or designated fiduciary should review the following items at the frequency noted....
  
• Investment Policy Statements
  The following is a sample Investment Policy Statement (IPS). At a minimum, the IPS should contain the following sections...
  
• Crediting Participant Contributions
  This document contains a final regulation revising the definition of when certain monies which a participant pays to, or has withheld by, an employer for contribution to an employee benefit plan are "plan assets" for purposes of Title I....
  
• Guidance on Plan Expenses From the Department of Labor
  A number of questions have been raised concerning the extent to which plans may pay certain expenses that might be viewed as conferring a benefit on the plan sponsor...
  
• Pension Protection Act Can Shield Fiduciaries
  Like grandma with a fresh batch of cookies, the Pension Protection Act of 2006 (PPA) holds out some sweet treats for fiduciaries of 401(k) plans....
  
• Small Business Tax Credit for 401(k) Startup Costs
  Startup costs have always been a major hurdle to small businesses who want to start a 401(k) plan, but there is a federal tax credit that helps scale this barrier....
  
• Helping Employees Meet Their Retirement Planning Needs
  Less than one-half of U.S. workers know how much they need to save for a comfortable retirement, a situation particularly significant for employees of smaller businesses....
  
• The Importance of Default Options for Retirement Saving Outcomes
  A Pension Research Council paper summarizes the evidence for how defaults impact retirement savings outcomes at all stages of the savings lifecycle....
  
• Investment Advice And Fiduciary Liability
  In a study conducted by The Profit Sharing/401k Council of America, they found that 51.9 percent of respondents provide investment advice....
  
• 401k Glossary of Terms
  This glossary of investment and retirement related terms provides simple definitions of terms that you may need to know....
  

To learn more about Capital Cities' defined contribution plan services and how they can work for you, call Joe Bill Wiley at 800.743.6010.

Capital Cities, L.L.C.
47 South Meridian
Suite 425
Indianapolis, IN 46204
office: 317.475.4500
toll free: 800.743.6010
fax: 317.475.4505