Providing you the tools

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1 Solutions for Plan Sponsors Providing you the tools Sample investment policy statement For The [Name of Plan] [Company Name] [Date] Retirement Strategies

2 Contents 1 Plan information 1 Responsible parties 2 Purpose of this investment policy statement 2 Plan objectives and purpose 2 Roles and responsibilities 3 Selecting and monitoring the investment options 3 Investment selection 4 Investment monitoring and reporting 5 Investment option termination 5 Administrative review procedures 6 Communication policies This is a sample investment policy statement template for your plan. MassMutual believes all plans should have an Investment Policy Statement (IPS) and the terms of the IPS should be closely followed. We have provided this sample statement free of charge as a service to our valued clients. The only request we have is that you not share our sample IPS template with third parties. Please contact your MassMutual Retirement Services professional if you have any questions or comments.

3 Plan information Plan name: Type of plan: Plan adoption date: Plan year-end date: Plan number: Trust ID number: Responsible parties The parties responsible for managing and operating the plan include but are not limited to: Plan Fiduciary (Sponsor): Trustee: Investment Provider: Investment Committee: Recordkeeper: [NAME and contact information] [NAME and contact information] MassMutual [NAME and contact information] [NAME and contact information] 1

4 Purpose of this investment policy statement The Investment Policy Statement establishes investment principles and a framework for selecting, monitoring and evaluating investment options under the Plan. Annually we will review this Investment Policy Statement, and if appropriate, amend it to reflect changes in the market, Plan participant objectives, or other factors relevant to the Plan. The Investment Policy Statement defines the Plan s investment objective as well as defines the roles of those responsible for the Plan s investments. It also establishes investment procedures, measurement standards and monitoring procedures. If this Investment Policy Statement conflicts with the Plan Document, the provisions of the Plan Document will prevail. Plan objectives and purpose [Name of Company] sponsors a [Plan Name] plan to provide employees with a vehicle for saving for their retirement. Plan participants direct their individual account balances among the investment options selected by the plan fiduciary. The plan provides participants with the opportunity to make their own investment choices and permits them to make changes to their allocation instructions [frequency: such as daily ]. The plan fiduciary strives to provide a range of investment options that will enable all participants to invest in the way that they feel best suits their long-term investment objectives. This Plan is a qualified employee benefit plan intended to comply with all federal laws and regulations. This Plan is designed to comply with the provisions of ERISA Section 404(c). Roles and responsibilities The responsibilities of the Plan Sponsor include: Selecting the Trustee; Hiring the Investment Provider and/or Recordkeeper Appointing the member(s) of the investment committee (if one exists). The responsibilities of the Plan s Trustee(s) include: Investing plan assets in accordance with the Terms of the Trust Agreement. 2

5 The responsibilities of the Investment Provider include: Providing financial information on a regular basis as determined by the Plan; Making reasonable investment decisions consistent with the stated approach; and Providing information to assist the plan fiduciary. The responsibilities of the Investment Committee (if no investment committee exists, the Plan Sponsor) include: Developing a sound and consistent investment policy; Selecting a suitable investment provider; Selecting diversified investment options with varying objectives and risk/return characteristics; Monitoring and evaluating performance results and recommending investment option changes; Providing employees with investment education to help them be informed investors. The responsibilities of the Recordkeeper include: Maintaining and updating individual account balances; Updating plan contributions as well as withdrawals and distributions. Selecting and monitoring the investment options [Name of Plan/Investment Committee] recognizes different investors have different investment objectives. The Plan strives to provide participants with an appropriate range of investment options to meet the various risk profiles of its participants. Investment selection The Plan intends to provide an appropriate range of investment options that will span the risk/return spectrum and allow Plan participants to construct portfolios consistent with their unique individual circumstances, goals, time horizons and tolerance for risk. Major asset classes to be offered may include: Stable Value Fixed Income (multiple categories) Asset Allocation (lifestyle and balanced) Asset Allocation (lifecycle) Large Cap Equity (multiple styles) Multi Cap Equity (multiple styles) Mid Cap Equity (multiple styles) Small Cap Equity (multiple styles) International/Global (multiple styles and categories) Specialty (sector and other narrowly defined options) Self-Directed Brokerage Account 3

6 Optional: [Investors who wish to follow a disciplined asset allocation strategy require options that stay consistent to their stated investment style. Several style-focused core options, representing the primary asset classes (e.g., stocks, bonds and cash) allow participants to implement and maintain the integrity of their own customized investment strategy. Because the plan fiduciary recognizes some plan participants desire assistance in making investment decisions, the plan also offers asset allocation/balanced strategies. These options offer a simple means to implement an asset allocation policy by having investment professionals implement and monitor the asset mix. A participant only chooses one balanced/asset allocation option to implement a chosen investment strategy.] Optional: [To satisfy the needs of active investors, the plan offers a self-directed brokerage account.] The [Plan sponsor/investment committee] after determining the asset classes to be used, evaluates investment providers and chooses a provider to manage the investment options. Each investment provider must meet certain minimum criteria: 1. Be an insurance company, bank, investment management company or an investment adviser under the Registered Investment Advisers Act of Be operating in good standing with regulators and clients, with no material pending or concluded legal actions. 3. Should provide detailed information on its history, investment philosophy and approach, and its principals, clients, locations, fee schedules and other relevant information. The particular investments should pursue the following standards: 1. Performance equal to or greater than the median return for an appropriate, style-specific benchmark and peer group over a specified time period. 2. Specific risk and risk-adjusted return measures should be established and agreed to by [Plan Sponsor/investment committee] and be within a reasonable range relative to an appropriate, style-specific benchmark and peer group. 3. Demonstrated adherence to the stated investment objective. 4. Competitive fees compared to similar investments. 5. An investment manager that provides all performance, holdings, and other relevant information in a timely fashion, with specified frequency. Investment monitoring and reporting The ongoing monitoring of each investment option must be a regular and disciplined process. Monitoring will occur on a regular basis and utilize the same criteria that were the basis of the investment selection. Monitoring is the mechanism for revisiting the investment. Investment option termination 4

7 [Plan Sponsor/Investment Committee] will terminate an investment option upon losing confidence in the investment option s potential to: Achieve performance and risk objectives, Maintain a consistent investment style. There are no hard and fast rules for investment option termination. However, if the investment consistently fails to adhere to one or more of the above conditions, it is reasonable to presume a lack of adherence going forward. Failure to remedy the circumstances of unsatisfactory performance, within a reasonable time, shall be grounds for termination. investment options will be reviewed at least annually for acceptability, under the guidelines outlined above. Communication policies At enrollment and on an ongoing basis the recordkeeper provides participant communication materials that include sufficient information for participants to make informed decisions. Any recommendation to terminate an investment option will be treated on an individual basis, and will not be made solely based on quantitative data. In addition to those above, other factors may include investment option manager turnover, or material change to investment processes. Considerable judgment will be exercised in the termination decision process. An investment option to be terminated shall be removed using one of the following approaches: Remove and replace (map assets) to an alternative investment option. Continue the investment option, but add a competing investment option. Replacement of a terminated option would follow the criteria outlined in the Selection of Investments and Managers section of this Investment Policy Statement template. Administrative review procedures The plan sponsor is accountable for monitoring and evaluating the investment options chosen for the plan. All chosen 5

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