Am I compliant if my third-party administrator or record keeper sends my retirement plan notices?
Maybe. (How’s that for being specific?)
As the plan sponsor for your company retirement plan, you are the overall fiduciary responsibility for plan compliance. If you decide to outsource specific responsibilities, you have an obligation to oversee the service providers and ensure they follow proper procedures. In case of a plan investigation by the Department of Labor (DOL), Internal Revenue Service, or litigating attorney, the buck stops (both legally and financially) with you—the plan sponsor.
When distributing required notices, many different levels of service are available to a plan sponsor through third-party administrators or record keepers. As the plan sponsor, you should review the level of support these service providers offer, including the following key aspects:
- Does the service provider send notices via multiple delivery channels? Does the service provider offer both electronic and first-class mail distribution notices?
- Does the service provider track notice delivery? Does the service provider know if the email, SMS, or mail was effectively delivered?
- Does the service provider provide a documented log of noticing attempts for each participant? Do they keep an audit log to prove the work they performed?
- Does the service provider offer participant verification to ensure receipt of notices? Do they have a way to verify not only distribution but also receipt?
- Does the service provider accept fiduciary responsibility and financial liability if the noticing work is non-compliant? Does the service provider contractually guarantee their work against any costs or fines related to it?
Reviewing these questions with the service provider and determining what scope of work they provide helps you decide the best solution for your plan. If the service provider isn’t able to meet all expectations, the remaining compliance requirements fall on the plan sponsor to execute.
After choosing a direction, the plan sponsor should document who is responsible for which requirements and procedures. The outsourced service provider’s obligations should match the services provider’s contract. Any internal responsibilities should be documented with executable procedures and designated responsible internal parties.
In short, third-party administrators or record-keepers can support the plan with its noticing responsibilities, but you must verify to what extent they provide and take responsibility for the service.
If you’re interested in outsourcing the complete responsibility regarding participant communication and distribution of notices, contact us. Plan Notice follows DOL best practices to ensure plan compliance regarding noticing. In addition, we provide an audit log proving diligence regarding both distribution and receipt verification for each notice sent. Finally, Plan Notice accepts all liability regarding the noticing responsibilities, including any costs for fees associated with investigation, audit, or litigation.
