A few weeks back we explained how dangerous outdated language may be hiding in your 401(k) plan’sinvestment policy statement (IPS). Last week we outlinedhow a 401k plan sponsor should construct an appropriate IPS.These well-articulated and reasoned articles are just fine, butwe’ve discovered humor often yields more effective results thanstraight logic. In that vein, we present the Top 10 reasons every401(k) plan needs an updated investment policy statement:

#10: An IPS integrates and allows you to remainfocused on your corporate Vision and Mission statements –Seriously, where else do you use these things, anyway?

#9: An IPS forces you to act with consistencyregarding investment objectives – Any Joe can pick a buminvestment option, but the DOL only forgives the ones who documenthow they picked it.

#8: An IPS defines an explicit timeline toregularly review and updated the document – What, like youdon’t have better things to do?

#7: An IPS can help show you how tocommunicate better with your employees – Since we all knowyou're such an expert at that now (just ask youremployees).

#6: An IPS offers a proper accounting of realrisks as they pertain to the plan’s exact demographics – Seeabove.

#5: An IPS outlines measurable procedures fortrustees’ and participants’ education – See above above, andyour little dog, too.

#4: An IPS provides an outline for you tofollow in your periodic due diligence reports – Making it moredifficult to be “sold” the next great thing by your localneighborhood non-fiduciary investment salesman.

#3: An IPS contains a well laid-outidentification of the method of evaluation – Which just mightscare away those aforementioned salesmen before they waste too muchof your time.

#2: An IPS might just be the firstpiece of documentation asked for when the DOL auditors come acalling – But you knew that because your fiduciary consultantalready told you.

And the #1 reason every 401(k) plan needs an updated investmentpolicy statement (drum roll, please):

An IPS can keep you out of trouble – Unless you’re foolishenough to not follow what it says, for then you’ll be as exposed toliability as a lone zebra in the veldt during Simba’s dinnertime.

OK, so I won’t make it on Letterman. Maybe you’d prefer theoriginal articles referenced in this story’s first paragraph.