Administrator Fiduciary: ERISA Section 3(16)
What is a 3(16) fiduciary?
There is a fiduciary definition under ERISA Section 3(16) for an individual or entity that acts as THE Plan Administrator. The 3(16) administrator, often the employer, 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 under ERISA or by the plan document include:
- To act as named fiduciary under ERISA and to choose the Investment fiduciaries and service vendors
- To interpret the plan
- Retain experts to assist with administering the plan including coverage and discrimination testing and contribution allocation
- Determine that all deducted and submitted contributions are applied to the appropriate participant and/or "source"
- To produce annual census including eligible compensation information
- Provide for annual audit for the plan (if necessary)
- File 5500/8955-SSA and required schedules
- Procure fidelity bonds on all persons that administer the plan
- To maintain all necessary records
- Fix plan operational errors
- To determine participant eligibility in the plan
- Provide participants enrollment kits including 404(c ) compliance information, Qualified Default Investment and fee summaries
- Distribute SPD and SMM to plan participants
- To render decisions regarding participant claims such as-
- Loan applications
- Hardship applications
- Distribution & rollover requests
- Qualified Domestic Relations Orders
- Provide participant quarterly statements
- Provide participants annual notices including Auto-enrollment notices, fee disclosure notices and SARs
Is a TPA a 3(16) Fiduciary?
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.
CecilCo 3(16) Support Services
CecilCo provides limited 3(16) fiduciary services that allows employers to save time and focus on their core business. Areas where we provide our limited ERISA 3(16) fiduciary support in addition to routine TPA services are highlighted.