Delegation of fiduciary duties
3. It should spell out how fiduciary duties are delegated to the service provider.
Normally, the plan document will appoint the plan sponsor as the administrator of the plan. There must be details on which plan administrator duties are going to be handled by other parties, so everyone’s aware of the extent of their fiduciary duty and the responsibility they have for different tasks.
The plan document is the starting point, Ms. Elliott notes. “For any named fiduciary to be relieved of fiduciary responsibility, the plan document must provide a procedure for that named fiduciary, the one with the original responsibility, to either designate someone else or allocate her duties among the other fiduciaries,” she writes.
When it comes to the responsibility of choosing other providers, those outsourced fiduciaries with those powers need to represent their authority. “The vendor should not be trying to interpret the plan documents him or herself, but instead rely upon that representation,” Ms. Elliott writes.