Fiduciary Information

Is a TPA a 3(16) Administrator?

A third party administrator (‘TPA’) may be retained by the plan or the plan administrator, but a TPA is typically neither the 3(16) administrator nor a fiduciary. Some TPAs will accept appointment as a 3(16) fiduciary, but a plan sponsor should assume that a TPA is not intending to act as a 3(16) administrator unless the TPA’s contract says that the TPA is serving in that capacity.

Similarly, actuaries, accountants and auditors are typically not serving as fiduciaries.

What Is a 3(16) Fiduciary?

An ERISA Section 3(16) fiduciary acts as THE plan administrator. The 3(16) administrator is responsible for managing the day to day operation of the plan. The duties of the plan administrator are set by ERISA and the terms of the plan document. Some of the responsibilities that may be assigned to the 3(16) administrator by the plan document include:

• To act as named fiduciary under ERISA
• To determine eligibility of employees to participate in the plan
• Retain a CPA, attorney, actuary or other experts to assist with administering the plan
• To maintain all necessary records
• To interpret the plan and publish rules
• File 5500/8955-SSA
• Procure fidelity bonds on every person
• Upon request provide documents to participants
• Distribute SPD and SMM to plan participants
• Provide participants notices including tax notices, enrollment kits, SARs, fee disclosure notices, J&S notices
• Reviewing and approving financial reports, investment reviews and other reports
• Establishing a funding policy
• Construing and resolving questions of plan interpretation
• Making findings of fact
• To review and render decisions regarding participant claims
• Fix plan operational errors
• Determine if a purported QDRO is actually a QDRO
• Provide participant statements

What is a 402a?

The 402(a) serves in a comprehensive fiduciary roll. The 402(a) is responsible for the selection and monitoring of all other plan fiduciaries and assumes most of the plan sponsor duties.

What is a PEP?

A PEP is a Pooled Employer Plan which was created by the SECURE Act. PEP’s technically became available effective January 1, 2021, but they are still a relatively new offering in the retirement plan industry. PEP’s allow unrelated employers to come together in a single consolidated plan to potentially achieve better servicing at more competitive price point. PEPs are designed to emphasize professional administration and investment management.