Skip to main content

A Handy Way to Remember Who is "Administrator" & "Fiduciary"

by SPBA Past President Fred Hunt

This explanation is nowhere in the law books, but it is a handy way to remember who is the official Administrator of the plan versus the TPA and others to whom administrative duties are delegated. It also clarifies who is the official Fiduciary of the plan versus other people who may also have fiduciary duty. The trick: use capital letter for the official Administrator & Fiduciary...and lower case letters for the delegated administrator & fiduciary.

The Administrator is the official plan sponsor or Board of Trustees of the plan. When laws & plan lanugage refer to the "Administrator", this is the person or entity to whom it refers.

The administrator is the entity or entities, such as TPA, to which certain administrative duties are delegated.

The Fiduciary, like the Administrator (usually one in the same) is the official plan sponsor or Board of Trustees of the plan. Again, when plan language refers to "the Fiduciary", this is to whom it refers. When the official Fiduciary delegates duties to other entities such as TPAs, investment firms, etc., these other entities take on some fiduciary responsibility to the degree that they have "discretionary powers" (the power to make decisions on behalf of the plan, such as whether to pay a claim or not is not absolutley clear within the interpretation of the plan language). However, ultimate fiduciary responsibility always reverts back to the Fiduciary because the official Fiduciary is supposed to be "prudent" in the selection & oversight of fiduciaries. Thus, if there is a breach of fiduciary duty, the Department of Labor might prosecute both the involved fiduciary as well as Fiduciary. The term fiduciary (also sometimes known in some laws & regulations as "co-fiduciary" or "knowing participant") is any person or entity with discretionary power who knows or should have known about the operations of the plan. The fiduciaries are even responsible to keep an eye on the Fiduciary who hired them. For example, if a TPA with some fiduciary responsibility detects that the Fiduciary is doing something "imprudent" (the word most often used to describe breachof fiduciary duty), the fiduciary has the responsibility to alert the Fiduciary to correct that, and if that doesn't look like it will work, the fiduciary may even be expected to alert the individual plan participants and the Department of Labor of the transgression. For a fiduciary to do this to a Fiduciary who hired the fiduciary is not disloyalty. It is a legal requirement. In other words, it's like an honor code, "I will not lie cheat or steal, nor condone anyone who does."

Again, this use of capitals & small letters is nowhere in the law books. It is simply provided to you as a handy way to tell the players and who's responsible for what.