Retirement Plan Fiduciaries – and What it All Means

A company’s retirement plan can have several individuals and/or committees whose actions make them fiduciaries. These are named in the plan document.

The different fiduciary roles include:

• 3(21) Fiduciary: Generally responsible for retaining, evaluating and monitoring all fiduciaries of, and service providers to, the plan. The 3(21) Fiduciary can be given total discretion over a plan and can be the “Named Fiduciary”.
• 3(16) Administrator:  Coordinates communications among the plan, the participants, and the government. The 3(16) Administrator is responsible for signing the 5500. The 3(16) Fiduciary could be the “Named Fiduciary” or the “Named Plan Administrator”.
• 403(a) Trustee: Responsible for operating and investing the plan assets according to the plan’s trust provisions. The 403(a) Trustee may be a discretionary trustee. The 403(a) Trustee may also be a “directed” trustee, meaning it receives direction from the participants, a designated 3(21) investment fiduciary, or designated 3(38) investment manager. Directed trustees generally accept very limited or no fiduciary responsibility.

What is a Named Fiduciary?
You’ll notice that the term “named fiduciary” appears in both the 3(21) Fiduciary and 3(16) Plan Administrator paragraphs above. The named fiduciary is the person or entity with whom the buck stops when it comes to your retirement plan. The named fiduciary is responsible for management and operations of the plan, and bears liability for ensuring that the plan is run according to ERISA, IRS Code, and the provisions of the plan document.

Offered and Accepted
It’s crucial that you have documentation that the named fiduciary for your retirement plan has accepted, in writing, these responsibilities.

What Does This All Mean for Me?
Choosing the right fiduciary (or fiduciaries) for your retirement plan is critical. Working with a provider that understands this, and structures your retirement plan in a way that minimizes risk can greatly simplify this process.

In our next blog, we’ll cover some of the issues to consider when vetting fiduciaries.
For a complimentary risk analysis of your company’s risk exposure, contact us.