Fiduciary Support. Clarity. Confidence.
What is an ERISA Fiduciary Compliance Overview?
Did you know the Employee Benefits Security Administration (EBSA), a branch of the U.S. Department of Labor, is tasked with regulating, monitoring, and enforcing Title I of ERISA?
In fiscal year 2023, EBSA recovered $1.4 billion from employers who violated ERISA rules. They also concluded 196 criminal investigations and obtained indictments against 60 individuals for offenses related to employee benefits.
When the Department of Labor audits ERISA Health & Welfare or Retirement Plans, they follow a detailed process to uncover compliance failures. By conducting an ERISA Fiduciary Compliance Overview in advance, you can mirror their review steps, allowing you to proactively detect and resolve issues before they result in significant fines or legal consequences.
What does a 3(16) Plan Administrator do?
The fiduciary who is responsible for the day-to-day operations of your Health & Welfare or Qualified Retirement Plan is a 3(16) Plan Administrator under ERISA.
For most companies, the Plan Sponsor typically assumes the role of Plan Administrator if no other fiduciary is hired to fulfill the position.
Your TPA is NOT a Plan Administrator
It is important to keep in mind that Third Party Administrators (TPAs) are not the same thing as a 3(16) Plan Administrator.
Your 3(16) Plan Administrator must be a prudent expert in ERISA compliance, and shares personal liability for the plan along with the Plan Sponsor.
On the other hand, a TPA typically performs “ministerial functions” for the plan — and does not take on a fiduciary responsibility.
The key benefit of hiring an independent fiduciary to serve as your 3(16) Plan Administrator is that he or she will monitor all TPAs and lower-level fiduciaries to ensure the entire operation is being run properly.
3(16) Fiduciary Services
As the fiduciary in charge of overseeing the day-to-day management and operations of your plan, the ERISA Advisory Group handles the following:
- Act as 3(16) Plan Administrator – assuming all personal liability and management of day-to-day operations of the Plan
- Monitor, Evaluate and Replace Service Providers
- Negotiate Service Agreements
- Prepare and Submit Government Filings (including Form 5500, M-1 and other relevant filings)
- Review Plan Expenses
- Transmittal of ACA Information to Employers
- Maintain Summary Plan Description (SPD), Summary of Benefits and Coverage (SBC), and Trust Agreements
- Agent For Service to oversee all communications with government agencies, including the IRS, Department of Labor and other federal and state agencies
- Review & Audit Vendors
- Reduce Fees & Expenses
- Prepare Annual Fiduciary Report
- Distribute Participant Notices
- Review Affiliate and Employer Member Applications To Group Health Plans
- Conduct Financial Audit of plan financial statements
- Oversee Contributions To Plan
- Adjudicate Claim Disputes
- Determine Eligibility of Participants
- Determine Contribution Rates With Actuaries
- Maintain Plan Records
- Ensure Compliance with HIPAA Requirements
Enjoy Hands-off Planning & Compliance
As prudent experts in Health & Welfare and Retirement Planning, we will work to ensure your ERISA plan is both strategically designed and legally compliant.
Our goal is to take the duty of ERISA planning & compliance off your hands, so you can spend more time doing what you do best. Follow the DOL suggestion and outsource your administrative responsibility to us.
If you’re interested in hiring an ERISA independent fiduciary to serve as your 3(16) Plan Administrator, please schedule a free consultation to see if we can help.
The Key Fiduciaries in Retirement Plans
ERISA Section 402(a) Named Fiduciary
A 402(a) Named Fiduciary is designated in the plan document as having the overall authority to control and manage the operation and administration of the plan. Most commonly, the Named Fiduciary is the ERISA section 3(16) Administrator.
ERISA Section 3(16) Administrator
A 3(16) Administrator is the person or entity “so designated” in the plan document. The employer is the default Plan Administrator if none is designated. The Plan Administrator is basically responsible for any fiduciary responsibility not assumed by the ERISA section 403(a) Trustee.
ERISA Section 3(38) Investment Fiduciary
A 3(38) Investment Manager is a codified investment fiduciary on a retirement plan as defined by ERISA section 3(38). The name of this particular fiduciary makes it easy to guess its role. Essentially, the 3(38) is responsible for selecting, managing, monitoring, and benchmarking the plan’s investment offerings. In some plans, but not in participant-directed plans, a 3(38) also has discretionary authority to direct funds’ investment. Below is a more detailed list of those responsibilities.
ERISA Section 403(a)(1) “Directed Trustee”
