Why Hire an Independent Fiduciary
What is an Independent Fiduciary? An Independent Fiduciary is a third party that is retained to act as a Fiduciary to an ERISA covered plan. The Independent Fiduciary should be an expert in ERISA and knowledgeable about the duties and responsibilities. An ERISA Fiduciary should be independent of the “party in interest” that is engaged in the transaction and of its affiliates. William Kropkof has been engaged as an Independent Fiduciary since 1995. Bill has been appointed on cases by the U.S. Department of Labor, U.S. Bankruptcy Trustee, IRS and U.S. Attorney's Office and has worked closely with the DOL and the IRS on both civil and criminal cases. Independent fiduciaries are often used to manage plan assets, manage administrative functions and authorize transactions in which other Fiduciaries have a conflict of interest.
When would an Independent Fiduciary be hired? Because ERISA sets “prudent man” standards and imposes complex responsibilities and restrictions on Fiduciaries of employee benefit plans, it is important that you seek an expert in this area. Whether a Plan Sponsor is seeking professional advice on their Plans (Qualified Retirement Plan or a Health and Welfare Plan) and if it is voluntary on their part or if they are instructed to do so by a federal government agency; this is when an Independent Fiduciary is engaged. If you are a Trustee, Plan Sponsor or Plan Administrator of an ERISA covered Plan, it would be in your best interests to engage an Independent Fiduciary for Fiduciary Audits and Compliance Reviews in order to prevent violations before they occur. Most Plan Sponsors are unaware of violations that are occurring in their Plan, and are typically discovered when it is too late, which becomes extremely costly. The following are duties that an Independent Fiduciary is retained for:
Qualified Retirement Plans:
- Fiduciary Audits and Compliance Reviews of ERISA.
- Plan Sponsor has gone into bankruptcy and the plan participants must be paid out their benefits.
- Plan Sponsor has not made the appropriate contributions to the retirement plan or Plan Sponsor has not made contributions on a timely basis.
- Filing of government reports and payout of participants of an orphaned plan where the Plan Sponsor is missing or cannot be located.
- Conduct feasibility studies on offering a Multiple Employer Plan (MEP).
- Review existing Third Party Administration and Investment Record Keeper Agreements.
- Review and approve Real Estate transactions.
Health and Welfare Plans:
- Review Administrative Agreements for Third-Party Administration Services.
- Review commission structures that MEWAs or PEO's pay to Agents.
- Review Operating Agreements and Administrative Contracts and make recommendations regarding fees and operation efficiencies.
- Act as an Independent Third Party between the Plan Sponsor and the Governmental Agency when conflicts occur.
What encompasses a Compliance Review and Fiduciary Liability Audit? The ERISA Advisory Group can assist Plans in satisfying their compliance issues in all aspects of ERISA. In order to assess the Plan's operations, we analyze the following five components of ERISA:
- Reporting and Disclosure under Title I of ERISA.
- Fiduciary responsibility under Title I of ERISA.
- Tax issues under Title II and Title III of ERISA.
- Defined Benefit Plan issues involving the PBGC under Title IV of ERISA.
- Plan vulnerability to ERISA violations.
- Provide assistance in correction of violations in order to limit Internal Revenue Code excise taxes, avoid plan disqualification, and limit ERISA Section 502(l) and other penalties.