PLANSPONSOR - December/January 2021 - 30
ADMINISTRATION & GOVERNANCE | OUTSOURCING
Administrative Assistance
What 3(16) fiduciary responsibility means and how outsourcing it works
F
or many plan fiduciaries, it is challenging
to keep up with their administrative
responsibilities. " Nobody
ever went to college to be a plan administrator, "
says Patrick Curran, senior client
consultant at Unified Trust Co. in
Lexington, Kentucky. " The plan administrator
role is the fiduciary role that has the
most day-to-day responsibilities, but many
administrators don't have time to take on
all these responsibilities-or don't know
they have them. "
Defining the 3(16) Role
Fiduciary administrative duties fall under
Employee Retirement Income Security Act
(ERISA) Section 3(16). " The phrase '3(16)
fiduciary' has become this industry term,
and it can mean different things to different
people, " says David Kaleda, a Washington,
D.C.-based principal at Groom Law Group,
Chartered. " I view the 3(16) fiduciary role
as doing the things for the plan other than
those that are investment-related: the plan
administration. "
When thinking about plan administrative
work, it is important to distinguish
between fiduciary functions and
" settlor " -i.e., nonfiduciary-functions.
" Settlor functions focus more on plan
design, " Kaleda explains. " Fiduciary functions
have more to do with the operational
aspects of running the plan. "
Fiduciary administrative duties range
from signing the Form 5500 to hiring
providers and negotiating fees with them.
Here are five routine fiduciary administrative
duties that can pose challenges:
1) Maintaining plan documents. There
is a fiduciary responsibility to have accurate
plan documents, says Julie Stapel, a partner
at law firm Morgan, Lewis & Bockius LLP
in Chicago. For example, having inaccurate
information in the summary plan description
(SPD) about plan design violates the
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PLANSPONSOR - December/January 2021
Table of Contents for the Digital Edition of PLANSPONSOR - December/January 2021
The Truth About Plan Lawsuits
2020 PLANSPONSOR Best in Class DC Providers
Administrative Assistance
Striking the Right Balance
Electronic Upgrade
PLANSPONSOR - December/January 2021 - Cover1
PLANSPONSOR - December/January 2021 - Cover2
PLANSPONSOR - December/January 2021 - 1
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PLANSPONSOR - December/January 2021 - The Truth About Plan Lawsuits
PLANSPONSOR - December/January 2021 - 13
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PLANSPONSOR - December/January 2021 - 2020 PLANSPONSOR Best in Class DC Providers
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PLANSPONSOR - December/January 2021 - Administrative Assistance
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PLANSPONSOR - December/January 2021 - Striking the Right Balance
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PLANSPONSOR - December/January 2021 - Electronic Upgrade
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