Best practices for managing your defined benefit plan data

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Good data can help keep your defined benefit (DB) plan on track, in compliance, and may even help you make better decisions. Put simply, good data is critical to being able to meet your obligations to employees. But most importantly, it’s your fiduciary responsibility—as a DB plan sponsor—to effectively manage your plan data. Mistakes, incomplete or inaccurate data can impact everything from contribution amounts to compliance with IRS and DOL regulations.

Best practices for managing your defined benefit plan data

Review annually

Once a year, work with your DB plan service provider to help ensure your participant files are accurate.

  • Review and update employment data
  • Ensure all addresses are valid

Reconcile the data

If you have multiple systems with multiple vendors, reconcile the data at least annually. For example, your data should match your actuary’s census data and should not include deceased beneficiaries.

  • Document a process to follow when data does not agree

Track plan participants

This is the most challenging part for most plan sponsors, but also one of the most important for managing your data. Make sure you’re tracking who’s eligible to receive benefits and who’s already receiving benefits.

  • Consider checking in quarterly to identify participants turning 70½ (the age for receiving required minimum distributions) so you have a heads up on possible new beneficiaries
  • Create a process for locating missing participants; this could include researching beneficiary records or using a private search company
  • Try to proactively reduce the number of missing participants by providing clear instructions in your materials for how they can update their addresses

For more information on what data plan sponsors should be keeping track of, check out our defined benefit plan data checklist (PDF).

The data benefit of streamlining service providers

Another way to help better manage your DB plan data is to integrate your investments, recordkeeping, actuarial services and administrative services with 1 provider.

Storing data in multiple locations across multiple providers increases the chance for errors. Using a single provider can help reduce fiduciary risk, create efficiencies and decrease the propensity for errors, delays and unnecessary expenses.

We can help

Having a plan for managing your data today can help reduce your fiduciary risk and potentially save you and your participants time and money over the short- and long-term. Our defined benefit team at Principal can help you and your financial professional determine whether streamlining your providers is the right move for your plan and your participants. Give us a call at 800-952-3343, ext. 22681 or contact your advisor to get started.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, Iowa 50392.

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