Erisa Wise Llc Erisa 3(16) Plan Administration

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"A decision to hire a 3(16) fiduciary should be made prudently and solely in the interest of plan participants.  As part of its decision-making process, it is important for the plan sponsor to establish and follow a procedure that satisfies the requirements of ERISA.  According to the DOL, the plan sponsor must engage in an "objective process" designed to elicit the information necessary to evaluate the following three criteria:

(1) the qualifications of the service provider,

(2) the quality of services provided, and

(3) the reasonableness of the provider's fees in light of the services provided".

DOL Advisory Opinion 2002-08A.  See also DOL Field Assistance  Bulletin 2002-3

The term "ERISA 3(16)" is derived from Section 3(16) of ERISA, which defines the term "administrator" as one who is so designated by the plan document.  If the plan document does not designate a plan administrator, the responsibilities fall squarely on the shoulders of the plan sponsor (also known as the "employer"). 

Certain responsibilities of the ERISA 3(16) are fiduciary in nature, while others are ministerial (non-fiduciary).  The ministerial responsibilities include:

  • Applying eligibility rules to participation or benefits and calculating benefits and crediting service;
  • Preparing employee communications;
  • Preparing drafts of government filings;
  • Maintaining records;
  • Collecting and/or applying contributions, accounting and reconciling data;
  • Processing approved claims and loans for distribution;
  • Orientation of participants and providing plan information;
  • Preparing benefit statements;
  • Making plan administration recommendations; and,
  • Lead point of contact for all outside agencies, including audits, investigations, and inquiries.

Examples of administrative tasks involving the exercise of discretion and control include:

Plan Management and Administration

  • Selection, evaluation and monitoring of:
  • Trustee(s)
  • Service providers
  • Document provider
  • Unbundled or bundled services
  • Investments offered under the plan
  • Investment advisor to the plan, fiduciaries or participants;
  • Evaluation of all plan fees (e.g., service provider fee disclosure and determination of which fees may be paid by the plan); and,
  • Decision to delegate plan administration responsibilities to other fiduciaries.

Operation of the Plan

  • Interpretation of the plan document;
  • Facilitation of day-to-day operation of plan;
  • Timely and accurate reporting and disclosure (e.g., Form 5500, distribution of Summary Plan Description/Summary of Material Modifications, participant fee disclosure, benefit statements, Qualified Default Investment Alternative notices;
  • Distribution of benefits;
  • Administration of QDROs (develop procedures and process); and,
  • Administration of Loans (develop procedures and process).

The following are likely candidates who should consider hiring ERISA Wise, LLC as the ERISA 3(16) for their tax qualified plan:

  • Plan Sponsor who lack the time to ensure all regulatory functions for their retirement plan are carried out;
  • Plan Sponsors with staff who do not have experience or expertise in ERISA and want to ensure that their retirement plan retains its tax-qualified status; and,
  • Plan Sponsors concerned about their fiduciary responsibility.

ERISA Wise, LLC is not a Third Party Administrator. 

ERISA Wise, LLC is a fiduciary service for employer-sponsored retirement plans.   

ERISA Wise, LLC is independent of any insurance or investment firm.