Every written employee retirement plan must name at least one fiduciary. As a fiduciary, what are your fiduciary responsibilities? They include, but are not limited to:
Controlling plan operations: A fiduciary differs from a typical manager in that the fiduciary must act solely in the best interest of plan participants and their beneficiaries.
Communicating: Fiduciaries must ensure participants get documents they need to make informed investment decisions. These include:
- Summary Plan Description. This plain-language explanation outlines the plan’s standards for eligibility, vesting periods, source of contributions (employee with employer match/employer only/employee only), how to claim benefits, and a participant’s basic rights and responsibilities.
- Individual Benefit Statement. This gives participants information about their own account balances and vested benefits. Plans with participant-directed accounts must furnish statements quarterly. Individual account plans that do not allow participant direction must furnish statements annually. Traditional defined benefit pension plans must furnish statements every three years.
- Summary Annual Report. This outlines the financial information in the plan’s annual report. Traditional defined benefit plans provide an annual plan funding notice instead.
- Information and education. Fiduciaries should ensure participants have information they need to manage investments wisely. This includes general information about investment types, their relative risks and rewards, and how fees and expenses affect returns.
Some employers offer formal investment education. If you are a provider who gives general information, you are not a fiduciary. If you hire an advisor who offers specific investment advice to participants, they will also be fiduciaries who have a responsibility to plan participants.
- Handling funds. Employers must make any employee payroll contributions no later than the 15th business day of the month following the payday. For small plans (those with fewer than 100 participants), salary reduction contributions must be contributed no later than the seventh business day following withholding by the employer.
- Government reporting. Most plans must file a Form 5500 annual return/report with the federal government.
Sound overwhelming? A plan administrator can relieve you of some or all of these duties, including some of your fiduciary responsibilities. Please contact us for information.