CPFA Exam
A best practice for a service provider's formal a. an acknowledgment of fiduciary status
description of services might therefore include two b. clarification as to the extent of responsibilities
parts:
As a non-fiduciary advisor, you can educate your client and present possible investments for the Retirement Plan
Committee consideration.
If you recommend a specific fund replacement to the giving investment advice and are therefore a functional fiduciary to the plan.
plan sponsor or plan participants, you are considered
to be
If fiduciaries of participants use your recommendations a fiduciary act
- as opposed to information - to make investment
decisions, this could be considered
As a non-fiduciary advisor, you can meet with your general investment reports or discussing the appropriateness of the
client on a recurring basis (quarterly, annually, etc) if investments to the plan without making specific investment suggestions.
providing
Plan fiduciaries will almost always have to hire service providers for their plan under their ERISA "duty to obtain expert
assistance."
As a best practice, the advisor can help fiduciaries the service providers, which usually includes a TPA and a record keeper.
select:
In owner driven smaller plans, the advisor can assist the plan sponsor's HR staff - which is likely to be one person in working with the
various plan service providers.
In larger participant driven plans, the advisor can work the HR director, CFO, and the retirement plan committee to evaluate service
with providers.
A 3(21) fiduciary does not serve as a fiduciary investment advice fiduciary
investment manager, but instead usually as
f your client wants an advisor to manager plan 3(38) fiduciary advisor.
investments, or just the QDIA, they can hire a
A 3(21) fiduciary advisors can recommend investments plan fiduciaries.
but the final decision on which investments to choose is
up to the
A 3(16) plan administrator can take on administrative an investment capacity.
duties for the plan but does not act in
, CPFA Exam
A non-fiduciary advisors can provide education
The DOL is not required to be notified if the plan hires a 3(21) advisor.
The fiduciaries should do a review of the service prudent process was not followed when selecting the service provider. They
provider qualifications in order to prove a should also review the service agreement, document the decision process, and
have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a fiduciary to the plan, but different than advisors working as 3(38) fiduciaries, it
is rarely named in the plan document.
The service agreement between the plan sponsor and a TPA will work as a 3(16) fiduciary Plan Administrator.
the TPA is what determines if
ERISA 3(16) fiduciaries serve as the "Plan Administrator" and are responsible for administrative responsibilities in the
plan. These include assuring the plan operation remains in compliance with the
plan document, providing administrative and compliance documents for the
fiduciary file and assuring that employee notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as investment fiduciaries and their main duty under ERISA is to provide investment
advice.
3(38) fiduciaries may also serve as the named investment manager for the plan, and unlike 3(21) investment advice
fiduciaries, will have discretionary control over plan investments.
Employee education through enrollment meetings is retirement plan advisors, including non-fiduciary, 3(21), and 3(38) fiduciary
performed by advisors. Assisting with fiduciary file documentation is another function that all
retirement plan advisors, both fiduciary and non-fiduciary are likely to perform.
As the advisor, you can assist the plan sponsor by by asking about documents he or she may be missing from the fiduciary file.
For example:
Are there any plan amendments?
Does he or she have copies of the required participant notices (including
participant fee disclosure) and account statements?
Where are the 408(b)(2) fee disclosure notices?
Does he or she have evidence that looked at the fee disclosure to determine if
plan fees are reasonable?
You can also assist the plan sponsor in identifying the plan service providers who may have copies of these documents, and assist
him in setting up a fiduciary file.
You may also want to show the sponsor a sample DOL investigation letter, so he is aware of what the DOL might ask in
advance of an investigation. You can point out that unsigned documents or
amendments and/or missing and incomplete plan documentation may put him
at risk in an audit.
A best practice for a service provider's formal a. an acknowledgment of fiduciary status
description of services might therefore include two b. clarification as to the extent of responsibilities
parts:
As a non-fiduciary advisor, you can educate your client and present possible investments for the Retirement Plan
Committee consideration.
If you recommend a specific fund replacement to the giving investment advice and are therefore a functional fiduciary to the plan.
plan sponsor or plan participants, you are considered
to be
If fiduciaries of participants use your recommendations a fiduciary act
- as opposed to information - to make investment
decisions, this could be considered
As a non-fiduciary advisor, you can meet with your general investment reports or discussing the appropriateness of the
client on a recurring basis (quarterly, annually, etc) if investments to the plan without making specific investment suggestions.
providing
Plan fiduciaries will almost always have to hire service providers for their plan under their ERISA "duty to obtain expert
assistance."
As a best practice, the advisor can help fiduciaries the service providers, which usually includes a TPA and a record keeper.
select:
In owner driven smaller plans, the advisor can assist the plan sponsor's HR staff - which is likely to be one person in working with the
various plan service providers.
In larger participant driven plans, the advisor can work the HR director, CFO, and the retirement plan committee to evaluate service
with providers.
A 3(21) fiduciary does not serve as a fiduciary investment advice fiduciary
investment manager, but instead usually as
f your client wants an advisor to manager plan 3(38) fiduciary advisor.
investments, or just the QDIA, they can hire a
A 3(21) fiduciary advisors can recommend investments plan fiduciaries.
but the final decision on which investments to choose is
up to the
A 3(16) plan administrator can take on administrative an investment capacity.
duties for the plan but does not act in
, CPFA Exam
A non-fiduciary advisors can provide education
The DOL is not required to be notified if the plan hires a 3(21) advisor.
The fiduciaries should do a review of the service prudent process was not followed when selecting the service provider. They
provider qualifications in order to prove a should also review the service agreement, document the decision process, and
have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a fiduciary to the plan, but different than advisors working as 3(38) fiduciaries, it
is rarely named in the plan document.
The service agreement between the plan sponsor and a TPA will work as a 3(16) fiduciary Plan Administrator.
the TPA is what determines if
ERISA 3(16) fiduciaries serve as the "Plan Administrator" and are responsible for administrative responsibilities in the
plan. These include assuring the plan operation remains in compliance with the
plan document, providing administrative and compliance documents for the
fiduciary file and assuring that employee notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as investment fiduciaries and their main duty under ERISA is to provide investment
advice.
3(38) fiduciaries may also serve as the named investment manager for the plan, and unlike 3(21) investment advice
fiduciaries, will have discretionary control over plan investments.
Employee education through enrollment meetings is retirement plan advisors, including non-fiduciary, 3(21), and 3(38) fiduciary
performed by advisors. Assisting with fiduciary file documentation is another function that all
retirement plan advisors, both fiduciary and non-fiduciary are likely to perform.
As the advisor, you can assist the plan sponsor by by asking about documents he or she may be missing from the fiduciary file.
For example:
Are there any plan amendments?
Does he or she have copies of the required participant notices (including
participant fee disclosure) and account statements?
Where are the 408(b)(2) fee disclosure notices?
Does he or she have evidence that looked at the fee disclosure to determine if
plan fees are reasonable?
You can also assist the plan sponsor in identifying the plan service providers who may have copies of these documents, and assist
him in setting up a fiduciary file.
You may also want to show the sponsor a sample DOL investigation letter, so he is aware of what the DOL might ask in
advance of an investigation. You can point out that unsigned documents or
amendments and/or missing and incomplete plan documentation may put him
at risk in an audit.
