Auditing Recordkeeper Statements A Fiduciary Duty

Auditing Recordkeeper Statements — A Fiduciary Duty?

Adhering to prudent standards includes auditing quarterly statements from the recordkeeper. However, there is no explicit requirement for plan fiduciaries to do so.

With regard to plan assets, fiduciaries do, however, have the explicit duty to ensure that:

Employee deferrals are contributed in a timely manner;

  • employee demographics are correct;
  • hardship and loans are being properly tracked;
  • the plan does not engage in prohibited transactions; and
  • plan assets are used exclusively to pay plan benefits and defray reasonable plan expenses.

Fiduciaries must act prudently in carrying out these duties, however, a bright-line test for the exact definition of prudent does not exist. It depends upon the facts and circumstances.

In addition, although there is no explicit requirement to review the trust statements, it is recommended that fiduciaries do so in a timely and prudent manner to ensure there are no errors or omissions. It is further recommended that the organization establish and follow a formal review process at reasonable intervals to determine if it is in the best interests of the plan and its participants to continue the relationship with current service providers or if the plan would be better served by new providers.

On a final note, the plan trustee has the added duty to keep plan assets safe. If you are the plan trustee, you should be overseeing how your recordkeeper handles plan assets. Auditing their quarterly statements helps to accomplish this.

For a deeper discussion of your fiduciary duties, contact The MFA Companies Wealth Management Team today.

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