Now whether you associate that quote with Voltaire, or more recently with Peter Parker’s Uncle Ben from Spiderman fame… in my opinion, truer words have rarer been spoken.
This could not be farther from the truth in running an organization. In the litigious world we are in today, I believe it is always better to be safe than sorry. Let me get right into my question. Do you know what your responsibilities are as a retirement plan sponsor? Seriously, I mean do you really know? If not, now you can… The simple fact is it’s more important than ever before to fully understand what you need to do, what you should not do and whom can help.
Like programming a VCR, this need not be a daunting task (yep, dating myself there)… and not knowing your responsibilities is not a defensible position.
So, let’s quickly jump into what you need to know to make you dangerously knowledgeable. Appropriate as I just finished shooting a quick video talking about Fiduciary responsibility, AKA “3(16)”.
1) As a plan sponsor, understand that you are a fiduciary. This is essentially the highest standard of care that one person can provide to another, there is no hiding behind any corporate shield – you and whom you denote with associated tasks are personally responsible;
2) There is a fairly sizable list of items that need to be compliant all the time, not just sometime (or when your plan’s 5500 is filed);
3) Even the fact of hiring someone to outsource or co-source your fiduciary roles does not remove you as a fiduciary (even if you hire magii), as the fact of hiring is a fiduciary decision! Keep in mind, however, that outsourcing does remove the main block of tasks, which many find is a huge help;
4) With over 20 years of experience working on and advising thousands of plans – we are fairly confident that your broker/financial advisor and perhaps third-party administrator may NOT be helping you perform your Fiduciary tasks;
5) That equally goes for most payroll companies, whom by contract, remove themselves from the Fiduciary label;
You still with me here?
Essentially, 3(16) services are plan administrative services; in essence, the fiduciary compliance tasks that every plan needs to perform regardless of size. There are a large amount of tasks that fall into these 3(16) duties, and rest assured, not all 3(16)’s created equal.
3(16) is everything outside of the investment selection of the plan. Like: filing the plan correctly, making sure loans are administered properly, remitting the salary deferrals timely and correctly, tracking eligibility and loans, working with your payroll provider, reviewing fees & services, making sure the plan document is correct and all related tasks.
Here’s the “teeth”, failure to comply with the myriad of 3(16) designated tasks can leave plan sponsors personally financially liable for any breaches! Just take a Google search of same, and you’ll see what I mean. It’s real and it’s happening.
Naturally, all is not dire – as a local retirement plan expert, me and my team at magii pension services can help! We are one of only a few firms on Long Island that can review your plan (at no cost), show you what needs to be addressed and, if chosen, perform many of those tasks with and for you.
Consider working with us to help you serve your plan. If you haven’t had a second opinion review, we would be happy to provide you one, free of charge. If you don’t know if you are in good shape, now you can!
I thank you very much for your interest! I wish you continued health and success and look forward to hearing from you