ERISA 3(38) Fiduciary has additional qualifications and who has been delegated discretionary authority over the investments of all or portion of the Plan’s assets. This authority may include:
- Directing Plan investments
- Monitoring the investment performance of other fiduciaries
- Selecting and retaining the investment lineup for the Plan
- Making final investment selections
- Monitoring and terminating investment choices for Plan Participants
- Appointing and deciding whether to continue to retain other limited scope investment fiduciaries
To qualify as an ERISA 3(38) fiduciary, the entity must be either an investment advisor registered under the Investment Advisor Act of 1940, a bank, or an insurance company.
ERISA 3(21) Fiduciary will vary depending on the terms the Plan Sponsor and the fiduciary have agreed upon. There are various levels of ERISA 3(21) involvement in the Plan: Limited Scope, Full Scope, and Specific Scope.
A “Limited Scope” fiduciary is a Plan advisor hired for a specific purpose. Responsibilities may include monitoring and replacing recommended investments, and advising on drafting and following an Investment Policy Statement. Limited Scope is the more common option.
A “Full Scope” fiduciary effectively takes over the role of the ultimate fiduciary in regards to the operation and administration of the Plan as well as the investments of Plan assets. Responsibilities may include hiring and monitoring other Plan service providers, including Limited Scope fiduciaries. Full Scope fiduciaries are less common.
“Specific Scope” option falls somewhere between Limited Scope and Full Scope, generally accepting a specific assignment by assuming discretion over a specific aspect of the Plan’s operations.
While the ERISA 3(21) fiduciary may share fiduciary status, the Plan Sponsor, through its board of directors and those whom it delegates, retains the ultimate decision-making authority.
ERISA 3(16) Fiduciary is responsible for general administration and maintaining discretionary control over a Plan’s assets including:
- Determining the eligibility of employees
- Retaining experts to assist with administration
- Maintaining all necessary records
- Interpreting the Plan
- Meeting applicable reporting requirements
- Formulating and administering Plan communications,
- Handling claims and appeals
However, not responsible for recommending Plan investments. ERISA 3(16) Fiduciary is NOT a Third-Party Administrator (TPA).