RPF M1 U7 Who Helps Manage the Plan Flashcards
Study
Who are the main parties responsible for a retirement plan?
The main parties responsible for a retirement plan include the plan sponsor, plan administrator, trustee, and fiduciaries.
Who assists the employer with plan operations?
The employer is assisted by service providers such as 401(k) Recordkeepers and Third Party Administrators (TPAs).
What is a Bundled Arrangement?
A Bundled Arrangement is a service provider arrangement where one company performs the responsibilities of several providers, such as advisor, recordkeeper, and TPA.
What is a Custodian?
A Custodian is the organization that holds in safekeeping the securities and other assets of a plan.
What is a Fiduciary?
A Fiduciary is any person or corporation who exercises discretionary authority or control over the management or disposition of plan assets.
What is a Named Fiduciary?
A Named Fiduciary is a fiduciary named by the plan or employer with authority to control and manage the operation and administration of the plan.
What are 2 responsibilities of a Plan Administrator?
The Plan Administrator is responsible for the administration and operation of the plan.
What is a Plan Sponsor?
A Plan Sponsor is the employer or group of employers that establishes or maintains the plan.
What does a Recordkeeper do?
A Recordkeeper handles transactional processes such as money in, money out, and reporting to participants.
What is a Third Party Administrator (TPA)?
A TPA is responsible for key plan administrative functions, such as performing annual plan testing and preparing Form 5500.
What is the role of a Trustee?
The Trustee holds the assets of the plan for the benefit of the participants and may manage plan investments.
What is an Unbundled Arrangement?
An Unbundled Arrangement is when the employer hires separate companies to provide specialized services for the plan.
What are fiduciary responsibilities under ERISA?
Fiduciaries must:
1. Act solely in the interest of plan participants
2. Carry out their duties prudently
3. Follow plan documents
4. Diversify plan investments
5. Pay only reasonable expenses.
What happens if fiduciaries do not follow basic standards of conduct?
Fiduciaries may be personally liable to restore any losses to the plan or profits made through improper use of plan assets.
What is the difference between a Plan Administrator and a Third Party Administrator (TPA)?
The Plan Administrator has fiduciary responsibility and authority, while a TPA provides ministerial services and does not have decision-making authority.
What are the functions of Plan Administration?
Plan Administration includes tasks such as:
1. calculating Eligibility
2. Performing Nondiscrimination Testing,
3. Preparing required Participant Notices.
What are the functions of a Recordkeeper?
Recordkeepers track contributions and withdrawals provide account access, and reports to participants and plan sponsors.
What role do Advisors play in retirement plans?
Advisors assist fiduciaries with investment education, service provider oversight, and participant communication.
What is the role of an Independent CPA?
An Independent CPA provides audited financial statements and assists in confirming the plan sponsor’s taxpayer status.
What do Actuaries do in retirement plans?
Actuaries perform required calculations and certify reports associated with defined benefit plans.
What is the role of ERISA Attorneys?
ERISA Attorneys provide legal knowledge and assistance in interpreting retirement plan provisions and creating legal documents.
What role does an actuary play in a corporation’s retirement plan?
An actuary signs and certifies the premium calculations and may represent the plan during an IRS or DOL audit.
Why might a plan sponsor hire an ERISA attorney?
A plan sponsor may hire an attorney with specific knowledge of ERISA to interpret retirement plan provisions and create legal documents.
What are some responsibilities of an ERISA attorney?
Responsibilities may include preparing legal documents, summary plan descriptions, and forms for IRS reviews, as well as representing the plan during audits.
