Fiduciary Responsibility

You are a Fiduciary!

Any party that has authority to make plan decisions is a Fiduciary. Business owners and executives, even if not officially named as the fiduciary on their company’s retirement plan, are held to a Fiduciary Standard. However, they are often busy and may not have the proper knowledge to manage their company’s plan.

So, what is the Fiduciary Standard? The overarching principles are:

• Fiduciaries must act in the best interest of plan participants (and other beneficiaries) &

• Fiduciaries must exercise their duties with the care, skill, prudence, and diligence that a prudent person familiar with such matters would use acting in a like capacity

Did you know? You can seek to reduce your liability for the plan by outsourcing investment management and/or administration to qualified professionals that can serve as fiduciaries.

LET US WORK FOR YOU

While an employer’s fiduciary responsibility can never be fully eliminated, plan sponsors can delegate certain responsibilities to qualified service providers.

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• A 3(38) Investment Fiduciary coupled with a 3(16) Plan Administrator can help plan sponsors reduce their fiduciary liability while improving the compliance of their company’s plan

When we are appointed as both the ERISA 3(38) Investment Fiduciary and 3(16) Plan Administrator, we work to alleviate most of the time-consuming administrative functions of a corporate retirement plan while effectively minimizing liability exposure for the plan sponsor and the Trustees.

Share responsibility with our co-fiduciary liability options

What is a 3(38) Investment Fiduciary?

An advisor acting in ERISA section 3(38) capacity has discretionary control of the plan’s investments. This investment manager has a fiduciary duty to prudently select, monitor, and replace investments for the plan. While a section 3(21) investment fiduciary recommends investments to plan fiduciaries who either approve or reject them, a 3(38) fiduciary (Investment Manager) is authorized to implement those recommendations without the prior approval of other plan fiduciaries.

3(38) Investment Fiduciary Services include:

• Prepare Investment Policy Statement

• Investment Management - Independent and unbiased screening process to select, monitor, and replace plan investments.

• Prepare plan reports - For the company to document that Fiduciary processes are being followed.

What is a 3(16) Plan Administrator?

While both 3(21) and 3(38) Investment Fiduciaries provide investment advice for the plan, a 3(16) Plan Administrator has a responsibility to ensure the plan is run according to ERISA requirements. This fiduciary role has a number of responsibilities related to the plan’s day-to-day operations, including:

• Prepare plan documents,

• Document fiduciary administrative processes,

• Prepare and distribute Summary Plan Descriptions (SPDs) and Summary of Material Modifications (SMMs),

• Prepare and distribute mandatory notices,

• Determine participant eligibility & vesting,

• Reconcile census data annually, and

• Review and authorize rollovers into plans.

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It is important to note, when selecting a 3(16) Plan Administrator, that in many cases 3(16) providers take on only a limited number of the tasks. Therefore, it is important to understand what tasks a 3(16) Plan Administrator is and is not taking on.