As great as 401(k)s are for organizations, managing them can become extremely complex and taxing on employers. Between all the processes, deadlines, and paperwork, these can become overwhelming for employers to handle while trying to run their businesses! But what many don’t realize is that they might have access to a service provider that can help them alleviate this strain. This is better known as a 3(16) fiduciary.
Below, we break down all the important things you need to know about 3(16) fiduciaries and how you can set up your business for success with these services.
What Does 3(16) Fiduciary Mean?
Think of a 3(16) fiduciary as these two things: Plan administrator and your next best partner. They are the ones designated to be responsible for the daily operations and administration of retirement plans. The best part about them is that they assume significant responsibilities to enhance compliance with the Employee Retirement Income Security Act (ERISA) and other regulations, and mitigate fiduciary liability, meaning that you can prevent yourself from getting impacted by penalties from errors.
The Benefits of 3(16) Services for Employers
3(16) service providers can help employers significantly save time, energy, and costs by taking on daily demands in many different areas. Some of their most notable tasks include:
- Reducing liability regarding a 401(k) plan and its assets
- Tracking and delivering eligibility materials for employees
- Monitoring timely submissions of payroll & transfer of funds
- Reviewing and approving transactions like participant distributions and incoming rollovers
- Preparing and signing Form 5500 and Form 8955-SSA
- Maintaining compliance and tracking any testing failures
Additionally, they also can help with future-proofing businesses by:
- Bringing awareness around new industry standards and updates
- Helping employers gain confidence and security in their long-term financial health
It’s important to note here that not all 3(16) service providers take on the same or all administrative tasks. Their responsibilities vary, so you will want to spend some time noting what’s important for your operations/has been impacting your time the most, and then seeing which provider can best meet your needs.
How Do I Get 3(16) Fiduciary Services?
Thankfully, you likely won’t have any trouble finding 3(16) services as many 401(k) providers also offer these. Ubiquity is one of them. Along with our transparent, low-cost retirement plans, we can help employers by taking on a wide range of administrative tasks, including overseeing and reviewing plan amendments and revisions, compliance testing, approving and denying hardship and loan requests, and much more.
Ready to learn more about how Ubiquity can take the load off plan management for you? Get in touch with us here today.
