Who is 401k plan administrator

The 3 16 Plan Administrator is responsible for both day-to-day ministerial tasks and fiduciary decisions involved in keeping a plan running smoothly. Instead, most will outsource almost all ministerial functions to a service provider that go by a variety of names, such as recordkeeper, plan administrator, or third party administrator TPA.

Some ministerial tasks related to k plan administration include:. Performing annual compliance testing including nondiscrimination testing. Processing contributions, loan payments, distributions, salary deferral changes, and investment election changes. Monitoring eligibility and vesting. Providing required notices and benefit statements. However, the list could go on.

A recordkeeper can perform all of these tasks, and more, by following a set of procedures. However, a recordkeeper that has not accepted fiduciary responsibility as discussed below does not—and should not—make any discretionary decisions when completing these tasks.

If the recordkeeper discovers an issue that requires a discretionary decision, it should consult the 3 16 Plan Administrator for direction. This is an operational error. Deciding how to correct an operational error requires the use of discretion, and is a fiduciary decision that belongs to the 3 16 Plan Administrator.

In some cases, the next step will appear obvious to all parties—but the recordkeeper should still seek direction before acting. In addition to handling ministerial tasks, some recordkeepers are also willing to handle some fiduciary-level responsibilities.

These services can be attractive, especially to smaller employers, who lack the staff to keep up with signing distribution forms and other discretionary issues. Some tasks a 3 16 service provider may agree to take over in a fiduciary capacity include:. Ensuring loans meet IRS guidelines. Approving a k hardship withdrawal. Authorizing distributions. Securing a fidelity bond. The list of 3 16 services a service provider is willing to provide is unique to each provider.

Plan sponsors should fully review and understand exactly what fiduciary responsibilities the provider will—or will not—take on. It's a good idea to check the service agreement to look for limitations on the services, fees for services in excess of those limitations, and any excluded services. Still unsure about who and what you need to set up a k plan? Need new players for the k plan team you already have? Get in touch with a Human Interest retirement specialist today.

Article By. If it is, the Board of Directors and officers can be held liable as plan fiduciaries even if they know little about the day to day operations of the plan. The plan document would then provide that an administrative committee designated by the employer would be the Plan Administrator. Appropriate language in the plan document and fiduciary liability coverage. As mentioned above, fiduciaries operate a little differently than plan administrators.

Their daily activities can differ based on service agreements, like plan administrators, but often reflect as such:. Needless to say, there is a lot to being a plan administrator or fiduciary.

This post shared a high-level illustration of the various tasks that these roles do, but there are many other responsibilities to consider as well. If you want to learn more about how we support plan administrators and fiduciaries through our retirement plan advisory services, contact our team.

Curious to see how your retirement plan stacks up to others in the marketplace? Check it out here. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice.