Who’s Doing All This Stuff If It’s Not You?
If you missed it, the first blog in our Back to the Basics, Fiduciary Style series was the origin story—why fiduciaries exist. This one is the behind‑the‑scenes montage.
You know the part of the movie where the hero is calmly doing their job… while a thousand small, unglamorous things are happening perfectly in the background so the world doesn’t implode? Maybe that’s not a typical movie plot, but that’s often real life. And that’s this blog.
Because when plan sponsors hire a 3(16) fiduciary, they’re not just outsourcing a title. They’re outsourcing a very real, very long, very compliance‑heavy to‑do list. And if they don’t hire a 3(16)? Surprise —they own every single task on that list.
So today, we’re breaking down:
- What tasks plan sponsors are legally responsible for
- What a 3(16) fiduciary takes off their plate
- Why these tasks actually matter (even the boring ones)
No jargon. No scare tactics. Just clarity—with a side of fun (as fun as talking about fiduciary responsibility can be).
The Theme: “Someone Has to Do It”
Retirement plans come with numerous benefits, but sadly, they don’t run on autopilot (unless you hire EGPS as your 3(16) fiduciary…but we’ll get to that later).
Forms don’t file themselves. Deadlines don’t politely reschedule. Regulators don’t accept “Oops, we didn’t know” as an answer.
So the big question isn’t whether these tasks need to happen. It’s who is doing them—and who’s responsible when they don’t. That’s where our story starts today.
What Plan Sponsors Are Responsible for (whether they know it or not)
Under ERISA, the plan administrator—often the employer by default—is responsible for the day‑to‑day operation and compliance of the plan.
That includes a lot of things. At a high level, it includes:
- Making sure the plan follows IRS and DOL rules
- Ensuring employees are treated consistently and fairly
- Keeping documentation accurate, complete, and up to date
- Approving plan transactions properly
- Sending required notices on time (not “eventually”)
And yes—if something goes wrong, liability follows responsibility. This is why many plan sponsors look at their role and say: “Respectfully… I did not sign up for this.”
Enter the 3(16) Fiduciary: The Ultimate Task Taker
A good 3(16) fiduciary doesn’t just advise or assist. They formally assume responsibility for specific administrative and compliance duties. (Important note – it depends on the 3(16) service provider. It’s crucial to check if they do take liability for their responsibilities. EGPS does. 😊)
Translation: They don’t just help you do the work. They own it.
We’re about to show you what that actually looks like in real life when clients enlist EGPS 360 – 3(16) fiduciary services. Let’s talk about the big stuff we take off plan sponsors’ plates.
Plan Administration & Compliance
The background: Every retirement plan is governed by a formal plan document, and ERISA requires the plan to be operated exactly according to that document. That means eligibility rules, contribution formulas, vesting schedules, and administrative procedures all have to line up—on paper and in practice. The IRS and DOL don’t just care what the document says; they care what actually happens day to day.
Without a 3(16), the plan sponsor must:
- Interpret plan documents
- Apply eligibility rules correctly
- Ensure operations match the plan’s written terms
With EGPS 360 – 3(16) fiduciary services:
- We administer the plan according to its rules
- We monitor compliance with IRS and DOL requirements
- We make sure the plan is operated the way it’s supposed to be
Required Notices (yes, all of them)
The background: Every year, plan sponsors are required to distribute a long list of notices to participants—things like fee disclosures, safe harbor notices, blackout notices, and summary annual reports. Some go to all employees. Meanwhile, some only go to eligible participants. Some are annual, some are event‑based, and all of them have specific delivery rules and deadlines.
Without a 3(16), the plan sponsor must:
- Know which notices are required
- Know when they’re due
- Ensure they’re delivered correctly
With a EGPS 360 – 3(16) fiduciary services:
- We identify required notices
- We coordinate timely delivery
- We document that it happened
Eligibility, Enrollment, & Contributions
The background: Plans don’t allow employees to participate automatically—there are eligibility rules, entry dates, and contribution formulas that must be followed precisely. The DOL also requires employee deferrals to be deposited as soon as administratively possible, not “when someone gets to it.” Small delays or miscalculations can quickly turn into compliance failures.
Without a 3(16), the plan sponsor must:
- Track employee eligibility
- Enroll participants correctly
- Ensure contributions are calculated and deposited properly
With a EGPS 360 – 3(16) fiduciary services:
- We oversee eligibility and entry dates
- We help ensure contributions align with plan terms
- We assist with participant-elected contribution changes in payroll to maintain accuracy
- We provide oversight so issues are caught early
Loans & Distributions
The background: Loans and distributions aren’t just payroll requests—they’re regulated plan transactions. Each one must meet specific plan rules, IRS limits, and consistency requirements. Plan sponsors are expected to approve or deny requests prudently and uniformly, with documentation to back it up.
Without a 3(16), the plan sponsor must:
- Determine if requests meet plan rules
- Approve or deny transactions
- Ensure consistency and documentation
With EGPS 360 – 3(16) fiduciary services:
- We review and approve loans and distributions
- We ensure decisions align with plan provisions
- We document fiduciary oversight
- We assist with the force-out process to help manage small account balances in accordance with plan provisions
Census Data Compilation & Review
The background: Every year, plan sponsors are required to provide accurate employee census data so the plan can be tested, reported on, and kept compliant. This data includes compensation, hours, hire dates, termination dates, ownership information, and more. It feeds critical processes like nondiscrimination testing, Form 5500 preparation, and overall plan administration.
Sounds simple—until you realize how easy it is for small errors to sneak in. Missing data, inconsistent payroll fields, or outdated information can create downstream compliance issues that don’t show up until testing or an audit.
Without a 3(16), the plan sponsor must:
- Compile complete and accurate census data
- Review data for consistency and errors
- Answer follow‑up questions from recordkeepers, TPAs, and auditors
With EGPS 360 – 3(16) fiduciary services:
- We coordinate census data compilation if given access to the plan sponsor’s payroll system
- We review data for accuracy and red flags
- We help ensure the information supports compliant plan operations
Required Form Filings
The background: Retirement plans are required to file specific forms with the IRS and Department of Labor—most notably the Form 5500—on an annual basis. These filings summarize the plan’s operations, assets, and compliance status, and they rely on accurate data and timely submission.
Without a 3(16), the plan sponsor must:
- Ensure required filings are submitted on time
- Address follow-up questions or corrections
With a 3(16):
- We coordinate required filings
- We review information for consistency and accuracy
- We help support timely, compliant submissions
IRS Audit Support & Representation
The background: Retirement plans can be audited by the IRS at any time—sometimes due to testing results or filings, and sometimes just randomly. When an IRS audit happens, it’s a formal review of plan operations and compliance, not a quick check-in. The IRS expects clear explanations, timely responses, and proof that the plan has been administered correctly. Additionally, we also help with annual plan audits required due to plan size.
Without a 3(16), the plan sponsor must:
- Act as the primary point of contact with the IRS
- Gather and submit requested documentation
- Explain plan operations, decisions, and corrections
- Manage audit correspondence and deadlines
With EGPS 360 – 3(16) fiduciary services:
- We provide audit support and representation
- We assist with annual plan audits (for plans subject to audit requirements due to size) in addition to IRS audit support
- We help respond to IRS inquiries and information requests
- We explain plan administration and operational processes
- We support corrective action, if needed
The Big Picture: Less Stress, Less Risk, More Confidence
Hiring a 3(16) fiduciary doesn’t eliminate all responsibility for plan sponsors.
But it does:
- Reduce administrative burden
- Shift specific fiduciary liability
- Bring structure and expertise to complex tasks
- Create confidence that the plan is being handled correctly
Instead of wondering: “Did we do that right?” Plan sponsors get to say: “That’s covered.”
Final Takeaway: If You Don’t Outsource It… You Own It
Every retirement plan has the same reality: The tasks exist. The responsibility exists. The risk exists.
The only variable is who is handling it.
A 3(16) fiduciary exists for one simple reason: To take critical, compliance‑heavy responsibilities off the plan sponsor’s plate—and do them correctly.
And honestly? That’s a role worth outsourcing.
EGPS Can Help
If you’d like more information on how EGPS 360 – 3(16) fiduciary services can lighten your load (and calm your compliance nerves), let us know. We’re here to help. Grab more info on by filling out the form below.
