Outsourced Compliant Oversight

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Today we will be discussing Effective Third-Party Oversight for Retirement Plans.

In the evolving landscape of retirement plans, many plan sponsors find it increasingly beneficial to outsource certain duties. Tasks like recordkeeping and administration have long been handed to third-party experts. Even more so, there's a rising trend of employing investment advisors to supervise the funds offered by these plans. Recently, we've seen plan sponsors branching out to outsource key roles, including overall plan oversight and participant communication.

However, outsourcing doesn't mean relinquishing responsibility. Plan sponsors must remember that they still bear the ultimate fiduciary duty. They need to have robust procedures to oversee these third-party providers, ensuring that these providers meet their commitments and maintain compliance.

You might ask, how frequently should a plan sponsor check on their service provider?

The Department of Labor hasn't set a standard timeline for third-party oversight. This means plan sponsors need to create their procedures, deciding how often they'll review the outsourced provider's work. Some plans opt for annual check-ins, while others prefer quarterly meetings. Collaborating with the plan's operational committee can help in crafting a procedure that includes a written review of the provider's obligations. This should detail the proof of work and set a frequency for reviewing the overall scope, including any associated fees.

In conclusion, while plan sponsors can choose their oversight frequency, they must remember the potential liabilities if a service provider falls short. Given this responsibility, it's prudent to review all providers as often as feasibly possible.

For more information on Effective Third-Party Oversight for Retirement Plans, contact us today.