When offering employees a retirement plan it is not uncommon for plan sponsors to feel confused, overwhelmed or anxious trying to keep up with their responsibilities. Meeting deadlines, handling distributions, keeping track of forms and other documentation can all feel like too much to handle. Plus, the ever-changing compliance landscape has added another layer of administrative complexity and fiduciary responsibility, which has plan sponsors facing potential personal liability risks.
Partnering with the right fiduciary administrator is a critical part of retirement planning and easing those risks. Here is a look at three common misconceptions we hear — and the truths involving those misconceptions.
3 Common Misconceptions of Fiduciary Administrator Responsibilities
Myth: “My vendor seems to be on top of things, so I think I’m covered.”
Fact: Think again. Your vendor is most likely not a fiduciary and your service agreement probably states that they are not responsible for legal compliance. That means it is your responsibility as a fiduciary to ensure the retirement plan is operating in compliance. The fiduciary (a business owner or board of a public entity) remains ultimately responsible for the management and administration of the corporate benefits plan. In addition, if the basic standards of conduct set forth by the Employee Retirement Income Security Act (ERISA) are not followed, employers have personal liability to restore any losses or unnecessary plan expenses to the plan.
However, if you appoint a fiduciary administrator, like NPPG, they will take on the majority administration and risk, enabling the plan sponsor to focus on company growth.
Myth: “My company is small. We only have a few employees, so we don’t need a fiduciary administrator.”
Fact: Employers that provide a corporate retirement plan to their employees have a fiduciary responsibility to keep the plan compliant with ERISA, regardless of their size. This applies even if only one participant is in the plan. The only groups that the Department of Labor does exclude from ERISA fiduciary requirements are usually those plans offered by government agencies, municipalities or churches.
NPPG recognizes the intricacies of retirement plan management and the encompassing fiduciary responsibilities for all sizes of companies. Our professionals are experts in the nuances of both ERISA fiduciary and government regulatory requirements.
Myth: “I didn’t know much about the retirement plan rules, surely the IRS and DOL will give me a break for good intentions when they audit my plan.”
Fact: When it comes to fiduciary responsibility, ignorance is not bliss. The IRS and DOL do expect complete compliance. If you are caught in violation of rules, it is ultimately your responsibility. When NPPG Fiduciary Services is appointed as the fiduciary administrator, we will manage the oversight of the daily plan operations using the highest professional standards as well as take on a significant portion of the fiduciary liability. Taking on these responsibilities enables business owners to focus on their company and its future.
In the event that the compliance of the plan is investigated by the DOL, IRS or any other government agency, NPPG Fiduciary Services will be prepared to answer all inquiries.
Alleviate Risk by Appointing NPPG as Your Fiduciary Administrator
Plan sponsors who perform due diligence in the selection of a service provider should be prepared to evaluate and compare provider services, ensuring a sound decision is made for the plan and its participants.
Since 1997, NPPG has been one of the leading retirement plan administrative service providers, helping plan sponsors, Financial Advisors, CPA’s, Recordkeepers and TPAs nationwide. As a full-service plan administrator, NPPG provides comprehensive fiduciary services, including ERISA 3(16) and health and welfare plan documentation service.
Give us a call at (732) 758-1577 with any questions.