There is still some confusion among plan sponsors about whether or not they are plan fiduciaries, especially among sponsors of plans with less than $1 million in plan assets.
In fact, in spite of increasing discussion of offloading fiduciary risk by using a designated 3(38) investment manager, misconceptions about retained fiduciary responsibility persist.
Plan sponsors may be unaware that choosing a 3(38) investment manager is in itself a fiduciary act. While the 3(38) investment manager does assume responsibility for selecting and monitoring investments, the plan sponsor retains fiduciary responsibility for the selection and oversight of the manager. Yet, in a recent survey, 25% of respondents incorrectly believe they retain no fiduciary responsibility.
Informed employers confident in processes and decisions
With a clear understanding of their fiduciary obligations comes more confidence in plan decisions. For example, 67% of plan sponsors who know they are fiduciaries are confident that they have an appropriate process in place to document investment decisions, compared to 59% of plan sponsors who do not know they are fiduciaries. As to confidence in an appropriate process to monitor investment decisions, 72% of plan sponsors that know they are fiduciaries expressed such confidence, compared to 53% of sponsors that do not know.
Plan sponsors that know they are fiduciaries are more likely to offer a target-date fund than those that don’t know (69% compared to 56%) and to use automatic enrollment (61% vs. 51%) and auto escalation (44% vs. 34%) in their plans.
Managing your fiduciary responsibilities is easy with TRA’s Plan Administration Relief Services (PARS)
Offering a retirement plan can be one of the most rewarding decisions you make as an employer; however, administering a plan and managing its assets can be challenging and time consuming.
You may choose TRA to serve as an outsourced HR function and relieve you of many of the day-to-day duties associated with sponsoring a plan.
- Time savings
- Reduced liability
- Increased HR capacity
- Reduced audit risk