Fiduciary Services: Helping Clients Focus on Growth
NPPG Fiduciary Services, LLC (NPPGFS) performs the due diligence to help clients understand the complex and ever changing compliance landscape. We enable clients to find the most appropriate retirement plan solution to meet the financial needs of their business and their employees. NPPG provides the expertise and resources to seamlessly implement and manage all plan details from completing required paperwork to fulfilling compliance and fiduciary obligations.
Did you know?
You can alleviate administrative fiduciary risk and personal liability by appointing NPPG as your company’s ERISA 3(16) plan administrator.NPPG Provides Comprehensive Fiduciary Services, Including:
NPPG recognizes the intricacies of retirement plan management and the encompassing fiduciary responsibilities and our professionals are experts in the nuances of both ERISA fiduciary and government regulatory requirements. When appointed as the ERISA 3(16) plan administrator, NPPG takes on the majority of the fiduciary risk enabling the plan sponsor to focus on company growth.
Grow your company with the right partner! Call NPPG at 800.340.5160 or contact us here.
Employer Fiduciary Responsibilities
Every day, employers face unique challenges, take risks and overcome obstacles to operate smoothly with a goal towards financial success. Whether large or small, employers that provide a retirement plan all face one common risk: fiduciary responsibility. Employers that provide a retirement plan have a fiduciary responsibility to keep the plan in compliance with the Employee Retirement Income Security Act (ERISA). Due to the complex and ever-changing maze of regulatory rules, plan sponsors can often find it difficult to meet their fiduciary responsibilities placing them at risk for costly fines, penalties and legal ramifications.
ERISA litigation has exploded in recent years and employers have been shocked to learn that they face personal liability and potential financial ruin as a result of sponsoring a retirement plan. While public corporations and large non-for profits like educational institutions have been defending themselves in massive class action lawsuits, plaintiff attorneys have recently begun to focus on mid-sized and small plans whose employers have fewer resources and are forced to settle cases, rather than face enormous litigation expenses. One major area of litigation has become the failure of employers to set up proper processes and procedures to follow in satisfying their fiduciary obligations, failure to properly monitor plan fees and inadequate review of the performance of investment advisors.
In light of these developments, prudent employers understand the need to appoint an ERISA 3(16) plan administrator to manage the day- to- day plan operations in order to minimize their financial risk and enable them to focus on business development. Employers of all sizes are busy managing their organization and do not have the time and expertise to effectively run their plans. Often when problems arise, they are surprised to learn that their third-party administrator (TPA) is not a plan fiduciary and is not legally responsible for the plan’s compliance failures. The appointment of a plan administrator can alleviate time consuming administrative functions and effectively minimize liability exposure for the plan sponsor.
What does it mean to be a Plan Fiduciary?
Fiduciaries are subject to high standards of conduct and have important responsibilities because they act on behalf of participants and their beneficiaries in a retirement plan. They must act: (1) solely in the interest of plan participants and their beneficiaries with the exclusive purpose of providing benefits to them; (2) prudently in carrying out their duties; (3) by diversifying plan assets to minimize the risk of large losses; (4) by following the terms of the plan document to the extent they are consistent with ERISA requirements; (5) by paying only reasonable plan expenses and (6) by avoiding conflicts of interest.
The Plan Fiduciary, not the TPA, has the following primary duties:
- Ensuring that all required filings are made with the U.S. government in a timely manner (Form 5500, etc.) and signing the Form 5500
- Distributing required disclosures to participants
- Updating plan documents and summary plan descriptions in a timely manner for legislative and regulatory changes
- Overseeing that remittances are deposited into the plan’s trust in a timely manner
- Properly interpreting the terms of the plan document
- Administering plan loans correctly
- Administering hardship distributions correctly, withholding the correct amount of tax and remitting to the U.S. government timely
- Administering required minimum distributions after participants have attained age 70-1/2 correctly withholding the correct amount of tax and remitting to the U.S. government timely
- Administering in-service and termination distributions correctly withholding the correct amount of tax and remitting to the U.S. government timely
- Cashing out plan participants with low account balances
- Administering plan forfeitures correctly
- Determining if the participant qualifies for an early distribution on account of satisfying the plan’s disability rules
- Making certain that spousal consent has been obtained before making distributions
- Administering qualified domestic relation orders (QDROs) to make sure they meet ERISA requirements
- Preparing benefit statements
- Applying the plan’s eligibility rules correctly and notifying participants when they become eligible to participate in the plan
- Ensuring issuance of Form 1099Rs to participants who received distributions from the plan
- Ensuring that the plan meets the minimum coverage requirements that apply to retirement plans
- Ensuring that the plan meet the non-discrimination requirements that apply to retirement plans
- Determining if the plan is top-heavy and satisfying all of the requirements that apply if the plan is top heavy
- Determining if a participant’s vesting percentage has been calculated correctly
- Ensuring that the plan’s definition of compensation is being used correctly in administering the plan
- Ensuring that the annual cap on compensation is administered correctly
- Determining whether the participant’s elective deferrals and/or Roth contributions have been limited correctly
- Determining whether the aggregate limitations on contributions under Internal Revenue Code Section 415 have been satisfied
- Determining whether the participant’s catch up contributions have been limited correctly
- Determining whether the employer has made the correct matching contributions under the terms of the plan
- Procuring a fidelity bond for the plan
- Applying the qualified military service rules for participants who have returned to employment or terminated on account of death
- Fixing plan operational and compliance errors
- Monitoring and ensuring proper participant education
- Reviewing potential fraud risks within the plan
- Determining the amount of compensation paid to third party providers and investment managers to determine if payments are reasonable