business Employee Benefit Plan Administration: 6 Key Players September 12, 2023 Administering a retirement plan requires the effort of many players with different responsibilities. It can be confusing keeping all the key players straight. We shed light on the duties of trustee, custodian, investment advisor, recordkeeper and more. There are several key roles in maintaining a plan – the trustee, the custodian, the investment advisor, the recordkeeper, the third-party administrator (TPA), and the actuary (defined benefit plans only). Plans with more than 100 participants must also engage a CPA to audit their financial statements each year and sometimes tax professionals or attorneys are engaged to assist with legal matters. Here we will focus on the six primary roles: Trustee This is an appointed individual at the employer or financial institution hired by the employer that has primary fiduciary responsibility for ensuring that plan assets are managed for the best interests of the plan participants and their named beneficiaries. Trustees must follow the plan's rules in administering the plan, and they must follow the standard of care that a reasonable fiduciary would follow in fulfilling their responsibilities. Custodian A custodian provides safekeeping of a plan’s assets, but they do not own them and thus cannot buy, sell, transfer or move assets unless explicitly instructed to do so by the trustee(s). Investment Advisor The advisor’s role is to review and guide you through investment decisions for the plan during plan establishment and on an ongoing basis. In addition, the advisor will often host group educational meetings for plan participants. Recordkeeper The recordkeeper keeps track of the plan’s assets by participant, contribution type and investment option. They often provide website access to the employer and participants to initiate various transactions. In addition to providing on-demand account access to both the employer and participants, they also prepare quarterly participant statements. Third Party Administrator (TPA) The TPA provides the legal plan document, performs annual compliance testing, prepares the annual Form 5500, and serves as your ongoing resource for any technical retirement plan needs Actuary (for Defined Benefit Plans) Based on the benefits provided and employee demographics, an actuary for a Defined Benefit Plan prepares the annual actuarial valuation which estimates the value of employer obligations. Actuaries use historical data and future expectations to make assumptions for these variables. In addition to valuing employer obligations, Defined Benefit Plan actuaries calculate minimum contributions required to fund the Defined Benefit Plans. These actuaries also assist the employer in following laws and regulations regarding pension plans, which includes the timely certification of minimum contributions and the funded status. Compliance also involves time-sensitive government filings and participant notices. At the end of the day, all of the plan service providers share a common goal – to help the employer maintain a compliant and effective plan that provides the opportunity for all participants to save for retirement in a meaningful way. Need help with your plan? Contact us.
