The Employee Retirement Income Security Act of 1974 (“ERISA”) defines the term “Fiduciary” to include any person who:
A fiduciary, with respect to a retirement plan, must act solely in the interest of the participants and beneficiaries for the exclusive purpose of:
An employer who sponsors a retirement plan generally bears all fiduciary liability for the plan. This includes choosing vendors, selecting a fund line up, monitoring the investments and operation/administration of the plan. Many plan sponsors mistakenly assume that hiring outside vendors (Financial Advisor, Recordkeeper and TPA) relieves them of fiduciary liability, however, in reality, these outside vendors are usually not considered a fiduciary.
Of these fiduciary solutions, only 3(16) focuses on the administration or operational aspects of the plan. 95% of plan defects penalized by the Department of Labor (DOL) fall under Section 3(16).
For more information on the Employee Benefits Security Administration (EBSA) and their investigations, click here.