DELEGATION
OF PLAN
SPONSOR FIDUCIARY RESPONSIBILITIES Freedom One
Investment Advisors offers plan sponsors a powerful solution to greatly minimize their fiduciary obligations. Freedom One accepts the delegation of a discretionary plan fiduciary and will perform the complex investment management duties that would otherwise be the obligation of the plan sponsor.
Given the recent focus on plan sponsor neglect of fiduciary process and procedure, and the many lawsuits alleging plan fiduciaries are ignoring their fiduciary duties, Freedom One provides a vital benefit to plan sponsors looking to minimize the risks associated with offering a 401(k) retirement program to their employees. | Fiduciary Duties without Freedom One | Plan Sponsor Duties: | Define investment monitoring criteria, prepare and continually update the investment policy statement - Define investment selection methodology
- Define investment monitoring criteria, prepare and continually update the Investment Policy Statement
- Select asset classes and investment options to meet ERISA "prudent expert rules" and Section 404(c) requirements
- Monitor investment options against established criteria through ongoing reporting
- Make periodic investment fund changes based on investment option characteristics and plan demographics
- Prepare investment committee minutes and document decisions made at regular intervals
- Conduct a comprehensive fiduciary compliance review of the plan's investment management process and results
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Fiduciary Duties with Freedom One
| Plan Sponsor Duties:
| - Select and monitor Freedom One Investment Advisors
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Freedom One Duties: | - Define investment selection methodology
- Define investment monitoring criteria, prepare and continually update the investment policy statement
- Select asset classes and investment options to meet ERISA "prudent expert rules" and Section 404(c) requirements
- Monitor investment options against established criteria through ongoing reporting
- Make periodic investment fund changes based on investment option characteristics and plan demographics
- Prepare investment committee minutes and document decisions made at regular intervals
- Prepare a semi-annual comprehensive fiduciary compliance review of the plan's investment management process and results
|
Fiduciary Responsibility – An Overview
Fiduciary responsibility has been a growing concern among sponsors of qualified retirement plans over the past several years. Government agencies such as the Internal Revenue Service and Department of Labor issue rules and regulations that must be followed in order for plans to operate in a non-discriminatory manner and to ensure that employee rights are protected. As a retirement plan sponsor, you need to be aware of your responsibilities relating to the day-to-day administration of your Plan, and to understand what steps you can take to comply with the rules and regulations that govern qualified retirement plans. While there are many regulatory issues that could potentially apply to you as a qualified retirement plan sponsor, this information will help illustrate the most common fiduciary issues facing plan sponsors today. We will work with you to understand your fiduciary responsibilities and provide you with the tools you need to make informed decisions.
Who is a plan fiduciary?
Plan fiduciaries have responsibility for the establishment and ongoing administration of the plan, as well as the selection of investment options and service providers.
Common examples of fiduciaries include:
Plan Trustee – an individual or entity that holds title to assets in trust for the benefit of plan participants and their beneficiaries. A trustee is always a fiduciary.
Plan Administrator – a person or entity responsible for the day-to-day administration of the plan and generally designated in the plan document.
The Plan Administrator should not be confused with a Third Party Administrator (TPA). A TPA is typically not a fiduciary.
The sponsoring employer
The employer’s board of directors
Officers of the employer who are responsible for decisions that affect the plan
What rules define a plan fiduciary's responsibilities?
There are several rules that generally define a fiduciary’s responsibilities:
Prudent Person Rule – states that fiduciaries must carry out all duties with the care, skill, prudence and diligence of a prudent person acting in a like capacity and familiar with such matters.
Diversification Rule – states that fiduciaries should diversify plan investment alternatives so as to potentially minimize the risk of large losses.
Exclusive Benefit Rule – states that fiduciaries must discharge their duties for the express purpose of providing plan benefits to participants and their beneficiaries and defraying reasonable administrative expenses. Fiduciaries must also discharge their duties in accordance with the terms and provisions of the plan documents and other instruments governing the plan, such as trust agreements, except when they violate ERISA.
What are some additional responsibilities of a plan fiduciary?
Fiduciaries are also responsible for: Selecting an investment provider and investment options Monitoring investment options Maintaining accurate records Employee communications Monitoring plan administration and compliance
What role does the Internal Revenue Service
( IRS) serve?
One of the advantages of establishing a plan is favorable tax treatment for the plan assets. The IRS is charged with ensuring that your plan qualifies for those favorable tax benefits by making sure that your company is in compliance with the provisions of the Internal Revenue Code. The IRS helps you keep your plan in compliance by:
Ensuring that plan participants receive plan information such as participant statements and Summary Plan Description Reviewing plan assets to ensure compliance with fiduciary laws under ERISA Monitoring the actions of plan sponsors, fiduciaries, and trustees Educating employers and employees about the benefits of retirement plans Following-up on complaints received from plan participants
What is the Employee Retirement Income Security Act (ERISA)? ERISA was passed in 1974 to protect the security and well-being of millions of retirement accounts. Under ERISA, plan sponsors are required to design and operate their retirement plans for the exclusive benefit of participants and their beneficiaries. ERISA also sets standards of conduct for those who manage employee benefit plans.
What role does the Department of Labor (DOL) serve?
The DOL is charged with watching over the assets of the nation’s retirement plans. One of its
responsibilities is administering and enforcing the requirements established under ERISA. The DOL
does this by:
Ensuring that plan participants receive plan information such as participant statements and Summary Plan Description
Reviewing plan assets to ensure compliance with fiduciary laws under ERISA
Monitoring the actions of plan sponsors, fiduciaries, and trustees
Educating employers and employees about the benefits of retirement plans
Following-up on complaints received from plan participants
Interested in hearing from the industry experts?
Learn more about fiduciary responsibility as well as other important topics in the industry. | 
