The program allows employers to address their fiduciary risk and liability by appointing a qualified professional to oversee plan operations and introduce plan management controls.
Offered by QBI affiliate Fiduciary Administration, the program names the 3(16) fiduciary as the “plan administrator” who is responsible for the general operation of the plan. The expert adopts the formal responsibility for overseeing many regular plan-related actions, including proper plan documentation, filings, communications and reporting. By delegating this role to the 3(16) fiduciary, an employer has the ability to maintain a compliant plan and reduce their fiduciary risk with respect to this role and its responsibilities.
“We strongly believe that QBI clients who sponsor qualified retirement plans would benefit by appointing a 3(16) fiduciary to take ownership of this important responsibility,” says Nick Stonnington, QBI president and CEO. “Employers start retirement plans to invest for their futures and those of their employees, not to become compliance experts. Missteps can be costly and distract from the goal. With this service, they have the opportunity to relax about several important fiduciary obligations and focus on what matters most to them.”
The delivery of 3(16) services is possible through a contract between Fiduciary Administration and ERISA SMART. ERISA SMART President and CEO David Donaldson and his staff provide services to take responsibility of important fiduciary tasks, ensuring plans stay on track and allowing sponsors and their advisers to focus instead on helping participants achieve better retirement savings outcomes.
“Many trustees delegate their day-to-day operational responsibilities to employees who are unfamiliar with the complexities and requirements of qualified plan compliance,” Donaldson notes. “The result can be costly in terms of penalties and other legal actions, not to mention the expense of the time it takes company executives to respond to these issues.”
QBI is planning to enact an education campaign in early 2015 to assist financial advisers, accountants, and other industry professionals understand the features and benefits of introducing this service to their clients.