Roles of A 3(16) Fiduciary Advisor

Every 401(k) plan is required by law to officially appoint a “plan administrator” under Section 3(16) of ERISA. This typically creates two problems for Plan Sponsors –

  1. Most are unaware that this position is NOT being held the Plan’s Third-Party Administrator (TPA)
  2. It is most likely that their Plan names the “Employer” as the Plan Administrator

Therefore, if the Employer indeed is the “plan administrator”, one of two things will happen –

  1. The Employer will outsource this position to an outside fiduciary to reduce his or her personal risk; or
  2. The Employer will retain this position and “hope for the best”.

In our role as a professional 3(16) fiduciary, as well as a professional 402(a) “named fiduciary”, it becomes our job to ensure your retirement plan is established correctly, and then managed appropriately. We offer not only our management expertise, but also offer many other services, including (but not limited to) retaining all Plan-related documents, establishing and moderating your required Plan Administrative Committee meetings, reviewing and signing your IRS Form 5500, and benchmarking your Plan’s fees. We oversee all Plan-related vendors on the Plan Sponsor’s behalf. However, the Employer/Plan Sponsor retains ultimate authority to hire or fire. What is most important is that we NEVER compete with any vendor. Therefore, we are more likely to be objective in giving reports and recommendations to the Plan Sponsor.

When vendors, or the Employer/Plan Sponsor, receives questions, all are advised to contact us. Because we compete with no other vendor, we are more likely to give an unbiased answer. And since these questions are being posed to an outside fiduciary that is the 3(16) and 402(a) for over 800 plans throughout the United States, it is likely we will be able to respond with a quick answer.

“Managing” a tax-qualified 401(k) or ERISA 403(b) plan is not easy, for anyone. But we have yet to see an Employer who does well in their business feel excited about learning, and deciding, about daily Plan-related issues. Outsourcing fiduciary risk usually saves you money, reduces your risk, and allows you to concentrate more on what you like to do…..running your business!