As a business owner who sponsors a corporate retirement plan, it’s common to feel uneasy by complex administrative tasks associated with retirement plan management. These time-consuming day-to-day tasks can potentially lead to compliance errors and liability exposure. One way to reduce the risks of liability is to appoint an ERISA section 3(16) Plan Administrator who provides reliable 3(16) administrative fiduciary services.
Reducing Retirement Plan Compliance Risks
Any business who provides a retirement plan for employees has a responsibility to maintain compliance with the Employee Retirement Income Security Act (ERISA). With this responsibility comes a great amount of risk. Because of the many moving parts of a retirement plan, coordination is critical to ensure successful retirement plan compliance. But, even though the plan sponsor may depend on a Third-Party Administrator (TPA) for plan services, ultimate compliance responsibility lies on the plan fiduciary who signs the annual Form 5500.
On most plans, it is often the HR manager or business owner who signs the annual Form 5500 in the capacity of the plan fiduciary. But what many fail to realize is that if they sign the form, they are taking on a fiduciary role that puts them personally on the line. If the plan ends up being out of compliance with the Employee Retirement Income Security Act (ERISA), they will be held liable for any breach of responsibility that he or she directly commits either by act or omission. Such penalties from audits and plan corrections can be quite expensive and onerous. However, the business owner may delegate fiduciary responsibility over to an ERISA 3(16) Plan Administrator. Acting as a shield in front of the owner, an ERISA 3(16) plan administrator not only absorbs the administrative tasks but also the liability.
What Does an ERISA Section 3(16) Plan Administrator Do?
An appointed ERISA Section 3(16) Plan Administrator accepts the delegation for certain administrative responsibilities and liabilities that must be fulfilled to ensure Plan compliance. The vast majority of the fiduciary tasks and communications for the plan become the 3(16) Plan Administrator’s responsibility as they perform these duties on behalf of the plan sponsor.
Specific responsibilities of a Plan Administrator include: monitoring and benchmarking vendor services and fees, review and approval of distributions from the plan, review and verify compliance testing, review and signing of the Form 5500 and much more.
NPPG-FS 3(16) Fiduciary Services
As one of the only retirement plan fiduciary firms that offer independent ERISA 3(16) Fiduciary Services, NPPG-FS is willing to work with most third-party administrators and recordkeepers to help lighten the load of administrative work, ultimately alleviating the burden of liability. No matter the plan size, our experts will review your plan and advise where you hold liability. Through a complete analysis, we’ll unveil exposures and help close those gaps by handling all the administrative tasks associated with plan compliance.
More than a service provider or broker, NPPG and NPPG-FS operate as your trusted partner. Call us at 732.758.1577 or contact us online to learn more about 3(16) fiduciary services.
Read more: What Should You Look for in an Independent 3(16) Administrative Fiduciary?