Investment Policy Statement

If you are an employer sponsoring a qualified retirement plan, you are inevitably plan fiduciary subject to rules of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA requires plan sponsors to make investment decisions prudently for the sole interest of plan participants and their beneficiaries. A fiduciary whose investment decision-making (or choice of investment options) fails to satisfy these requirements can be liable for investment losses experienced by the plan.

ERISA requires that a fiduciary engage in procedural prudence. The fiduciary should have a thoughtfully developed plan for making investments or selecting investment options. The fiduciary’s plan should be followed and periodically reviewed. If necessary, the plan may need to be revised. The investment policy statement is that plan that should be followed for choosing investments.

The investment policy statement, if properly designed, demonstrates that the plan has put in place a reasonable strategy for selecting, monitoring, and if necessary, changing plan investment objectives or investment options. If the investment policy is reasonable and followed accordingly, the plan fiduciary will satisfy the ERISA’s fiduciary requirement regardless of investment performance.

If the plan does not have an investment policy, it may be difficult to demonstrate compliance with the ERISA’s procedural prudence requirement. An investment policy creates an important documentation that the fiduciary’s behavior was prudent. Plan sponsors can download an Investment Policy Statement template or request a customized Investment Policy Statement by e-mailing us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Click here to download our Investment Policy Statement template