The Responsible Plan Fiduciary
ERISA Section 3(16) defines the Plan Administrator as a person or entity that has the highest level of fiduciary responsibility for a qualified benefit plan’s operation.
A comprehensive Plan Administrator possesses discretionary authority over the management and administration of the plan (primarily the operation of the plan), which includes, but is not limited to the evaluation and monitoring of service providers, determination of the reasonableness of providers’ fees, interpretation of the plan document, distribution of benefits, authorization and approval of tax filings, and monitoring of timely reporting and distribution of required plan disclosures.
FSMA only recognizes organizations that agree to serve retirement plans as a comprehensive Plan Administrator. By “comprehensive” FSMA refers to vendors that do not limit their role as a Plan Administrator by excluding essential fiduciary activities in their contracts. Vendors that combine a Plan Administrator offering with other services, limit their fiduciary value due to the inherent conflicts of interest possessed by all such “multiple hat” arrangements.
Organizations that carry FSMA’s “PA” designation in its registry number are comprehensive Plan Administrators. Plan Administrators approved by FSMA comply with a fiduciary standard for retirement plan sponsors that decide to retain that role, and for third parties to whom plan sponsors may outsource that role.
The handbookRetirement Plan Administrator: Scope and Conduct defines a standard set of steps for comprehensive Plan Administrators. The standard was developed by the Investment Fiduciary Leadership Council and is free for FSMA’s members. Non-members may order it online directly on IFLC’s website.
Click here for a briefing about the Standard.