selecting an open mep employers due diligence checklist - Fi360
selecting an open mep employers due diligence checklist - Fi360
selecting an open mep employers due diligence checklist - Fi360
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
involved with the MEP?11 Is there <strong>an</strong> ERISA attorney advising theMEP <strong>an</strong>d maintaining the pl<strong>an</strong>document? If so, what is theirbackground specific to MEPs?Pl<strong>an</strong> Documentation12 Consists of basic pl<strong>an</strong> document <strong>an</strong>djoinder agreementUsing the joinder or participation agreement the adoptingemployer will elect the specific eligibility, vesting <strong>an</strong>dcontributions that will apply to its employees.13 Pl<strong>an</strong> Administrator identified Generally the pl<strong>an</strong> sponsor/provider or the provider’s advisorycommittee who will be responsible for most the pl<strong>an</strong>’sadministrative functions such as coverage <strong>an</strong>d discriminationtesting, <strong>an</strong>nual reporting, hiring of service providers, <strong>an</strong>dnotifications to particip<strong>an</strong>ts.14 Named Fiduciary identified Generally the pl<strong>an</strong> sponsor/provider or the provider’s advisorycommittee who will be responsible for the selection <strong>an</strong>dmonitoring of pl<strong>an</strong> investments <strong>an</strong>d investment advisers.Basic MEP Structures15 Pl<strong>an</strong>s operated by third partyadministrators (TPAs)16 Pl<strong>an</strong>s operated by registered investmentadvisors (RIAs)17 Pl<strong>an</strong>s operated by independent pl<strong>an</strong>sponsorsSelf-Dealing <strong>an</strong>d ProhibitedTr<strong>an</strong>sactions18 Is there a proper separation of the roles<strong>an</strong>d ownership structure of the MEP’spl<strong>an</strong> sponsor, independent fiduciary,<strong>an</strong>d contracted service providers?19 How are all of the parties paid? Arethere potential conflicts of interest orprohibited tr<strong>an</strong>sactions?The providers operating MEPs described in lines 15-17 arefiduciaries <strong>an</strong>d may not use that authority to benefit themselves ortheir affiliates, to determine their own compensation or paythemselves out of pl<strong>an</strong> assets20 Does provider have <strong>an</strong>y ability todetermine its own compensation or topay its affiliates additionalcompensation?Reasonableness ofCompensation21 What is the amount of compensationpaid to the provider <strong>an</strong>d other serviceunder the arr<strong>an</strong>gement? Is itIf the proposed arr<strong>an</strong>gement has such a feature, the arr<strong>an</strong>gementmust be rejected.Services provided to a pl<strong>an</strong> by service providers are subject toERISA Section 408(b) (2) which requires that no more th<strong>an</strong>reasonable compensation be paid for them.The employer should seek information from the provider aboutfees <strong>an</strong>d compare that information to the fees charged by otherproviders offering similar services. This is often called“The first rule for fiduciaries is to put their interests last.”BOSTON | GREAT LAKES | LOS ANGELES | NASHVILLE | NEW YORK METRO | TAMPA | WASHINGTON, D.C.(o) 888.918.8386 www.fiduciarypl<strong>an</strong>govern<strong>an</strong>ce.com (f) 978.225.8398© Fiduciary Pl<strong>an</strong> Govern<strong>an</strong>ce, LLC 2012.