3(21) vs. 3(38) Fiduciary Advisors

“3(21)” and “3(38)” are two types of fiduciary advisors described in Employee Retirement Income Security Act (ERISA) regulations.

The 3(21) advisor is generally someone who acts as a co-fiduciary—he or she is equally responsible for fund selection and fund monitoring, but the plan sponsor makes final decisions. Under the 3(38) model, the entity or person who appoints that outside investment manager still has fiduciary liability for the appointment and for monitoring the actions of the investment manager. At the end of the day, the ultimate responsibility still resides with the plan sponsor, whether it is a 3(21) or 3(38) model.

If you have any questions about this excerpt, or would like to begin talking to a retirement advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Fiduciary Best Practices for Retirement Plan Sponsors

The plan sponsor is ultimately responsible for all facets of the plan. With not-for-profit organizations, that responsibility resides with the governing board because there are no shareholders. While a plan must name a fiduciary(ies), a person’s title does not determine if he or she is a fiduciary—fiduciary status is based on the functions performed for the plan.

Fee Disclosures

Annual Disclosure to Plan Participants

• This is the plan sponsor’s obligation, not the record keeper’s obligation. 
• Distributed to all eligible employees whether they are participating in a plan or not; covers administrative expenses and fees that apply on an individual basis (loans, qualified domestic relation orders, brokerage windows, etc.). 
• Includes the investment-related disclosures, such as performance data and benchmarks.

Retirement Plan Expert Joins Strategic Benefit Services Team

Financial services and corporate retirement plan expert Carol A. Idone, CFP®, AIF®, has joined Strategic Benefit Services (SBS) as Vice President of Business Development. SBS, an affiliate of the Healthcare Association of New York State, provides fiduciary advisory and consulting services for employer-sponsored retirement plans.

Employer Mandate Penalties Delayed Until 2015

The Obama Administration has postponed the Affordable Care Act (ACA) employer mandate penalties for one year, until 2015. The Department of the Treasury announced the delay on July 2, 2013, along with a similar delay for information reporting by employers, health insurance issuers and self-funded plan sponsors.

The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange. The Treasury plans to issue more formal information about the delay within a week.