Service Providers

Some Service Providers assume numerous investment fiduciary responsibilities on behalf of the employer plan sponsors. Some are known as "3(16) fiduciaries", derived from Section 3(16) of the Employee Retirement and Investment Security Act (ERISA), and assume certain plan management responsibilities thereby easing the fiduciary burden of the plan sponsor.

3(16) Fiduciary

The plan administrator under ERISA 3(16) is the person or entity named in the plan document. The determination of fiduciary responsibility is based on the functions undertaken. The person or entity must have some level of discretionary authority or control over the management or administration of the plan.

The duties of a 3(16) Fiduciary may include the following plan management and administration functions such as the selection and monitoring of trustees, service providers, document providers, unbundled or bundled services, investments, evaluation of plan fees and the decision to delegate plan administration to other fiduciaries.

3(16) Fiduciary operational duties may include: interpretation of the plan document, timely and accurate reporting and disclosure (e.g. form 5500, distribution of Summary Plan Document, participant fee disclosure, benefit statements, QDIA notices, administration of QDROs and the administration of loans.

The CEFEX Mark demonstrates that the 3(16) Fiduciary is following a prudent process, based on the Prudent Practice for Investment Stewards Standard and the ASPPA Retirement Plan Service Provider Standard.

Multiple Employer Plans (MEPs)

The retirement industry has seen innovations of business models which aggregate retirement plans by centralizing operational and fiduciary responsibilities, thereby off-loading the duties of the plan sponsor. These service provider arrangements can be beneficial for smaller plans or professional employer organizations (PEOs) because they provide access to increased investment and administrative expertise in a cost-effective manner. However, the plan sponsor maintains the responsibility of prudently selecting these MEP providers.

A CEFEX-certified MEP is independently assessed against a best practice standard, thereby providing increased assurance to the adopting plan sponsors.

The CEFEX Mark of Excellence for Service Providers