Your role and responsibility as a fiduciary of a retirement plan is an important aspect of a 401(k) plan.
ERISA—the rules and regulations that govern how a retirement plan is established and the process you need to have as a plan sponsor—was established in 1974. There’s a very important section that many people overlook, the Exclusive Purpose Rule. It states that when you establish a retirement plan, you’re doing it for the exclusive purpose of providing benefits to your employees and their beneficiaries.
We believe that it’s the basis to operate from to determine you’re doing everything you should be doing as a plan sponsor fiduciary to meet the obligation of helping your employees create that kind of benefit.
As a plan sponsor fiduciary, you have a duty of loyalty and a duty of prudence to your employees. This is the highest standard you can have in the industry. Being loyal to your employees means doing everything for their and their beneficiaries’ benefit and not doing anything that would harm them, disservice them, or disrupt them from creating benefits. Being prudent means doing everything with a standard and the knowledge and ability to run that plan would have.
“We can help you design a retirement plan with a fiduciary shield that can bulletproof you as the plan sponsor.”
The problem as a plan sponsor is that it’s not your full-time job or specialty. The government understands that, so you can outsource these roles. Frankly, we believe you can design a retirement plan that will almost bulletproof you from any fiduciary liability.
You do this by hiring prudent experts, or those with a 338, 321, or 316 designations.
A 338 has discretionary authority over the plan’s advancements, and you can hire one to make decisions about investment choices in your plan. A 321 fiduciary provides you with data and information so that you as the plan sponsor can choose which investments to have in your plan. A 316 fiduciary takes on all the liability of administering your plan, a critical role that most plan sponsors don’t take advantage of.
Think about it—you’re a busy HR director who now has the burden of making sure all notices are going out on time and that everyone is being communicated with, and if these things don’t happen, then you could be liable.
We can help you design a retirement plan with a fiduciary shield that can bulletproof you as plan sponsor by letting you allow other individuals to be a 338, a 321, and/or 316. It’s not difficult, but it’s important to be aware of your options.
If you have any questions, don’t hesitate to give me a call. I’d love to hear from you.