ERISA 3(16) plan administrator: SOMEONE ELSE SIGNS IT. AND ANSWERS FOR IT.
“As an ERISA 3(16) Fiduciary, we take on the day-to-day administrative tasks and are legally responsible for their accuracy and completion. The Third Party Administrator (TPA) cannot take independent action, only providing advice to fiduciaries, with no legal responsibility, other than the work-product.”
THE NAME IN THE PLAN DOCUMENT.
An ERISA 3(16) fiduciary is the plan administrator named in a retirement plan document, legally responsible for the plan’s day-to-day operations: approving distributions, delivering the required participant notices, and signing and filing the Form 5500.
Unless somebody has changed it, the document names the employer. In practice an owner, a controller or an HR manager holds the role right now, without a formal appointment and often without knowing the job came with a fiduciary title attached.
A third-party administrator does the work and hands it to somebody else to approve. A 3(16) does the work and is accountable for it. Apex offers both, under two entities, and we tell you which one you are buying. If you want the administration without the appointment, that is a legitimate choice: see what plan administration covers. Apex does not give legal or tax advice, and it does not select or manage plan investments.
WHAT COMES OFF YOUR DESK.
This is the first page of the scope document, and it is the list Apex publishes for the 3(16) role. Every line is a duty performed by Apex, with Apex answerable for its accuracy and its timing.
Duties that move to Apex Fiduciary Services, LLC on appointment.
Plan document services
- Interpret and implement plan document provisions
- Coordinate plan amendments and restatements
- Administer policies
Distributions to participants
- Determine eligibility of distribution requests and claims for benefits
- Approve or deny distribution requests
- Communicate with participants regarding claims
- Approve or deny account liquidation related to participant benefit claims
- Processing related to termination, retirement, death, disability, in-service distributions, hardships, loans and QDROs
Communications
- Ensure annual communications and disclosures are sent to participants, such as 404(c), QDIA, SPD, SMM, blackout, QACA and safe harbor
Monitoring
- Loans and defaults
- Payroll processing
- Vesting
Administration and compliance
- Review and confirm testing results
- Review and confirm contributions
- Assist with refunds for failed testing
- Assist with corrections for operational errors
- Form 5500 signing and the SAR
- Audit assistance
WHAT STAYS WHERE IT IS.
The second page of the same document. An honest description of this service has to include the part that does not move.
Duties that stay with the plan sponsor after the appointment.
Settlor decisions
- The decision to sponsor a plan at all
- What the company contributes to it
- Amending the plan, and ending it
Selection and monitoring
- Choosing the fiduciary you appoint
- Reviewing what it does, for as long as it serves
- Appointing is itself a fiduciary act
Payroll
- Accurate hours, compensation, dates of birth and dates of hire
- Transmitted on time, every cycle
- Most operational failures begin as a payroll field
The investments
- Selecting and monitoring the lineup is a separate role under ERISA 3(21) or 3(38)
- Apex provides neither, and does not manage plan investments
A 3(16) appointment is a scope, not a shield. It is not a guarantee and it is not indemnification. The scope is what the service agreement lists, and nothing outside it is implied.
SMALL PLANS GET HURT IN THE SAME THREE PLACES.
- 01
The notice calendar
A safe harbor notice, a QDIA notice, a summary of material modifications and a blackout notice each count from a different event, and none of them counts from the day somebody remembers.
Missing one can cost the plan its safe harbor status for the year.
- 02
Deposit timing
Participant deferrals have to reach the trust as soon as they can reasonably be segregated from the employer’s general assets. That means somebody is watching the payroll calendar on every cycle.
A late deposit is a prohibited transaction, it is reported on the Form 5500, and it is the first thing an examiner looks for.
- 03
Distribution approvals
Every approval is a decision made against the plan document, in a case the document did not anticipate, on a deadline. Denying one is harder still, because the participant is your employee and is standing in your hallway.
A participant who waits calls the Department of Labor.
WHO SIGNS THE FORM 5500.
The Form 5500 is signed by the plan administrator. When the plan document names Apex Fiduciary Services, LLC in that role, the signature and the responsibility for the filing’s accuracy are ours. Where the plan also requires a plan sponsor signature, that one stays yours.
It is signed under penalty of perjury, which is a strange thing to hand to an officer who did not prepare the filing and is not in a position to verify it. The summary annual report that follows from it goes out on the same appointment.
NOTHING CHANGES UNTIL BOTH SIGNATURES EXIST.
- 01Read the plan as it actually runsThe document and its amendments, the last two Forms 5500, the notice history and the testing results. Then we say plainly what we found, including whatever nobody has been doing.
- 02Agree the scope in writingThe service agreement lists each duty that moves and each duty that stays. If a duty is not on the list, it has not moved.
- 03Amend the plan documentThe document is amended to name Apex Fiduciary Services, LLC as plan administrator, and the appointment is accepted in writing. Until both are signed, nothing has changed.
- 04The calendar movesNotices, filings, approvals and deposit monitoring come onto our calendar, with a record of what was sent, filed and approved.
- 05Walk the plan against its document each yearAnything that has drifted gets flagged, and the correction goes in front of you before it becomes a filing problem.
WHAT AN APPOINTMENT CANNOT DO.
Naming a 3(16) does not end the employer’s fiduciary status. You chose the appointee, choosing is itself a fiduciary act, and you keep the duty to have chosen carefully and to keep watching the work afterwards. What changes is that the operational duties, and the accountability attached to them, sit with a firm that does them for a living. A provider describing the appointment as more than that is describing something else.
The hub sets out the three misconceptions people usually arrive with, on the fiduciary services hub.
PUT IT IN WRITING.
Send the plan document and the last Form 5500. We will send back a written list of what would move to us and what would stay with you.
