"First, many plan sponsors don’t know the difference between a 3(16), a 3(21) or a 3(38) fiduciary and the functions each one provides. We want to make sure the plan sponsor understands these roles."
Lamon continues with some more key points:
- The first thing we do is determine the comfort level of the plan sponsors and what goals they have for their plan. Do they want us to advise participants? Are we acting as a 3(21)? Do we outsource to Iron Financial as a 3(38)? Do they want to take some responsibility for investment decisions, or do they want to completely outsource investment selection and monitoring?
- Most of the plan sponsors out there we have found are having trouble making sure that the notices and all the right summary plan descriptions and notices of change of investment options to participate are being sent not only to their active employees, but to the employees who have moved on and still have remaining balances with the plan.
- As far as 3(16) goes, we’ve got Pension Financial Services, and they are great—a third-party administrator (TPA) that we use a lot that will step in to handle the administrative functions of a 3(16), overseeing the mailings and the notices.