Fiduciary Services
3(21) fiduciary We will serve as 3(21) fiduciary to plan
Fee review Annual fee and expense review of current plan
Inventory condition and features of the plan
Review plan documents and provider service agreements
Review Fee disclosure both to plan and to participants
Benchmark plan design and costs
Assistance with fee negotiations
Fiduciary Training for committee
Conduct training for Plan Committee members on:
Who are the fiduciaries of the plan
Fiduciary duties and responsibilities
Fiduciary liability and ways to reduce
Investment basics to support investment monitoring
Documentation requirements
Fiduciary insurance and indemnification
Plan committee creation
Discuss organizational structure and identify general objectives for Committee
Determine how the Committee will function & what duties it will perform
Determine who should and who should not serve on the Committee
Draft and present Committee charter for modification and adoption; charter to include:
Purpose of Committee
Committee members
Scope of authority
Roles and responsibilities
Meeting frequency
Reporting / documentation requirements
Fiduciary review
Evaluate 404(c ) compliance
The four key responsibilities of a fiduciary
Serve as a advocate – The exclusive benefit rule
“a fiduciary must discharge his or her duties for the exclusivebenefit of plan participants and their beneficiaries; and for the purpose of defraying the expenses of administering the plan.”Be a prudent “expert” – The prudent man rule
“a fiduciary must act with care, skill, and diligence that would be exercised by a reasonably prudent person who is familiar with such matters.”Diversify against risk – The diversification requirement
“a fiduciary must provide diversified investments so as to minimize the risk of large losses.”Govern according to plan policy
“a fiduciary has a duty to act in accordance with plan documents, ERISA and the DOL.”
The importance of being a §404(c) plan
By complying with Section 404(c) of the Employee Retirement Income Security Act (ERISA) and applicable Department of Labor regulations, plan fiduciaries can help protect themselves from liability for losses resulting from a plan participant’s investment decisions.
To comply they must first inform the participants that they are responsible for the investment results of their directed accounts (usually incorporated into the Summary Plan Description and the Investment Policy Statement) and they must provide:
Diversified investment options – at least 3 investment choices, each that is diversified, materially different in terms of risk and return characteristics, and when combined with other alternatives tends to reduce the overall risk of loss through diversification, and
Investment transfer flexibility – allow transfers among investments at least quarterly, and
Investment information – adequate to make informed investment decisions, and the name, address and phone number of the plan fiduciary (i.e.) responsible for providing investment information
Note: Certain fiduciary duties not protected under §404(c) include the responsibility to prudently select and monitor the plan’s investment choices.