ERISA SECTION 3(16) FIDUCIARY SERVICES AGREEMENT
APPOINTMENT OF FIDUCIARY FOR PLAN ADMINISTRATION
ACCEPTANCE AND CONSENT OF APPOINTMENT
WHEREAS, [Name of Plan Sponsor] (the “Plan Sponsor”) sponsors the [Name of Plan] (the “Plan”); and
WHEREAS, [Person or Body acting as the Named Fiduciary] is the Named Fiduciary of the Plan, as defined in Section __ therein (the “Named Fiduciary”); and
WHEREAS, Section __ of the Plan provides that the Named Fiduciary has the authority to appoint the “Plan Administrator,” as that term is defined in Section __ therein; and
WHEREAS, the Named Fiduciary wishes to appoint ERISA Fiduciary Administrators LLC, 14 Corporate Plaza, Suite 120, Newport Beach, CA 92603(“EFA”) as the Plan Administrator effective _________________; and
WHEREAS, EFA wishes to accept the appointment by the Named Fiduciary to act as the Plan Administrator and consent to the fiduciary responsibility described in Section 3(16) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) to perform the functions as set forth herein.
NOW, THEREFORE, the Plan Sponsor, the Named Fiduciary and EFA agree as herein set forth (the “Agreement”).
1. The Plan Sponsor and Named Fiduciary each acknowledges that EFA provided them with certain disclosures regarding EFA’s services, compensation and any conflicts of interest, including Schedule C of the Agreement.
2. The Plan Sponsor and Named Fiduciary each further acknowledges that (i) it received the disclosures described in Section 1 above before entering into the Agreement, (ii) the Agreement evidences the only arrangement entered into between the parties hereto, (iii) individually, they have taken sufficient time before executing the Agreement to obtain legal counsel and to make an informed decision about the merits of entering into the Agreement and that (iv) the disclosures provided by EFA constitute in their entirety the plan service provider information required to be disclosed in Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the regulations published by the United States Department of Labor.
3. Fiduciary Services provided by EFA. EFA agrees to provide the following services to the Plan Sponsor and the Named Fiduciary:
(A) Fiduciary Services. EFA shall perform the Plan Administrator Services described in Schedule A of the Agreement.
(B) The Plan Sponsor and Named Fiduciary each acknowledges and agrees that EFA shall have no responsibility (i) to provide any services related to the investment of the Plan’s assets, (ii) to render any investment advice to any party or parties or to any person or persons, or (iii) to participate in the selection, retention, termination or appointment of any other fiduciary regarding the plan, including without limitation, an Investment Manager, as defined in Section 3(38) of ERISA or to any person providing investment advice as described in Section 3(21) of ERISA .
(C) The Plan Sponsor and Named Fiduciary each acknowledges and agrees that EFA is entitled to rely upon all of the financial data, documents and other information provided to EFA by the Plan Sponsor, the Named Fiduciary or any other parties acting at their direction. The Plan Sponsor and the Named Fiduciary each agrees to notify EFA promptly in writing as to any material change thereto and to provide such additional data, documents and other information as may be reasonably requested by EFA.
4. EFA’s Compensation. The Plan Sponsor and Named Fiduciary each acknowledges and agrees as follows:
(A) The compensation that EFA shall be entitled to receive for its performance of the Fiduciary Services is set forth in Schedule B of the Agreement
(B) EFA shall be entitled to receive reimbursement of ordinary business expenses it incurs in performing ministerial or administrative support services in furtherance of its performance of its Fiduciary Services, including per diem payments and expenses for travel and meals in accordance with the Plan Sponsor’s board member per diem meeting fee and expense reimbursement policy.
(C) Unless agreed to by the parties, EFA shall not receive any other compensation, direct or indirect, for its performance of the Fiduciary Services.
5. Limitations on EFA’s Fiduciary Status. The Plan Sponsor and Named Fiduciary each acknowledges and agrees as follows:
(A) In performing the Fiduciary Services, EFA is acting solely as the Plan Administrator, as described in Section 3(16) of ERISA, and shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims.
(B) EFA’s performance of the Fiduciary Services shall not result in its becoming a fiduciary to the Plan as described in Section 3(38) of ERISA or in Section 3(21) of ERISA.
(C) EFA shall, from time to time, perform ministerial or administrative support services in furtherance of its performance of its Fiduciary Services and in the performance of such ministerial or administrative support services, EFA is not acting as the Plan Administrator, or otherwise in the capacity of a fiduciary to the Plan.
6. Representations and Warranties of Plan Sponsor and Named Fiduciary.
(A) The Plan Sponsor represents and warrants that [Person or Body acting as Named Fiduciary] is the “Named Fiduciary” as defined in Section __ of the Plan.
(B) The Named Fiduciary represents and warrants that it has the authority under the terms of the Plan to appoint EFA to be the “Plan Administrator,” as that term is defined in Section __ of the Plan, and to enter into the Agreement.
(C) The Plan Sponsor and Named Fiduciary each represents and warrants that the persons signing the Agreement on their behalf have all necessary authority to do so.
(D) The Plan Sponsor and Named Fiduciary each represents and warrants that, upon EFA’s written request, they shall cause to be delivered to EFA true and accurate copies of the governing plan documents including, without limitation, any and all amendments thereto, the Plan’s Summary Plan Description and any Summaries of Material Modification, and shall timely provide EFA with copies of any subsequent amendments or restatements of those documents.
(E) The Plan Sponsor and Named Fiduciary each represents and warrants that the Plan and related trust agreement permit payment of compensation to EFA from Plan assets.
(F) The Named Fiduciary has determined that the compensation charged by EFA, as set forth in Schedule A of the Agreement, is a reasonable expense of the Plan and is the obligation of the Plan; however, if Plan Sponsor desires, it may pay the compensation directly to EFA, rather than through a disbursement of Plan assets.
(G) The Plan Sponsor and Named Fiduciary each acknowledges and agrees that EFA and any of its affiliates may perform, among other things, retirement plan fiduciary services, retirement plan fiduciary consulting services, and plan administration for other clients and undertake their legal representation.
(H) The Plan Sponsor and Named fiduciary each acknowledges and agrees that EFA or any of its affiliates may take action in the performance of its duties for EFA’s other clients (including those who may have retirement plan arrangements that are similar to the Plan) that may differ from the timing and nature of action taken with respect to the Plan. Nothing in the Agreement shall be deemed to impose on EFA, or any of its affiliates, any obligation to take action or forebear from taking any action under the Agreement, in the same manner as it has for any of its other clients.
(I) The Plan Sponsor and Named Fiduciary each acknowledges and agrees that EFA and its affiliates may, by reason of its other such activities as described above, from time to time acquire confidential information and that EFA is barred from divulging to them or any other party, or to act upon, any such confidential information with respect to its performance under the Agreement.
(J) The Plan Sponsor and the Named Fiduciary each represents and warrants that all financial data, documents and other information that they provide, or cause to be provided, to EFA is true, correct and complete in all material respects and each acknowledges and agrees that EFA may rely upon such data, documents and other information in the performance of its services under the Agreement.
7. Representations of EFA. EFA represents as follows:
(A) It has the power and authority to enter into and to perform the Agreement.
(B) It will not participate in or otherwise acquire a financial or other interest in any transaction to be entered into by the Plan and does not have a material financial, referral or other relationship or arrangement with any other fiduciary to the Plan.
(C) It accepts the appointment by the Named Fiduciary to act as the Plan Administrator as set forth in the Agreement and consents to the fiduciary responsibility imposed by ERISA thereby.
(A) EFA agrees to indemnify and hold the Plan Sponsor and the Named Fiduciary harmless from any and all liabilities and claims, including but not limited to damages, court costs, reasonable legal fees and costs of investigation, which arise directly from EFA’s intentional misconduct or gross negligence with respect to its performance of Fiduciary Services; provided, however, in no event shall EFA be liable for any indirect, special consequential or exemplary damages.
(B) With regard to EFA’s activity arising from other than its performance of Fiduciary Services, the Plan Sponsor agrees to indemnify and hold EFA harmless from any and all liabilities and claims, including, but not limited to, damages, court costs, reasonable legal fees and costs of investigation which directly or indirectly are related to the Plan, its investments, expenses, the rendering or receipt of any investment advice regarding assets of the Plan or other operations and administration provided that such losses and damages are not directly caused by EFA’s intentional misconduct or gross negligence.
(C) With regard to EFA’s performance of Fiduciary Services, the Plan Sponsor agrees to indemnify and hold EFA harmless from any and all liabilities, claims or damages, and to pay EFA’s reasonable defense costs not otherwise paid under a policy of fiduciary liability insurance, to the extent that they are not caused by, or arise in connection with, an act or a failure to act by EFA that shall be determined to be a breach of EFA’s fiduciary responsibilities in accordance with the standards of fiduciary conduct set forth in Section 404(a) of ERISA determined by a court of competent jurisdiction.
9. Termination. Either party may terminate the Agreement upon thirty (30) days prior written notice to the other party. Such termination will not, however, affect the liabilities or obligations initiated prior to such termination, and such liabilities and obligations (together with the provisions of sections 5 and 11) shall survive any expiration or termination of the Agreement.
10. Receipt of Disclosure. Before executing the Agreement, the Plan Sponsor and Named Fiduciary shall review and consider the disclosures made by EFA (including in the Agreement), in particular the summary of compensation disclosures set forth in Schedule C and those portions of the Agreement related to Fiduciary Services, compensation, interests in transactions and potential conflicts of interest, as well as the remainder of the disclosures concerning, among other matters, background information such as educational and business history, business practices such as the types of services provided, etc. The Plan Sponsor or Named Fiduciary may terminate the Agreement within five (5) business days of the date the Agreement is executed without incurring a penalty or charge.
(A) Notices. Any and all notices required or permitted under the Agreement shall be in writing and shall be sufficient in all respects if (i) delivered personally, (ii) mailed by registered or certified mail, return receipt requested and postage prepaid, (iii), sent via email, or (iv) sent via a nationally recognized overnight courier service to the address shown in the Agreement, such other address as any party shall have designed by notice in writing to the other party.
(B) Assignability. The Agreement is not assignable by any party hereto without the prior written consent of the other parties.
(C) Effect. The Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors, survivors, administrators and assigns.
(D) Entire Understanding and Modification. The Agreement constitutes and contains the entire understanding between the parties and supersedes all prior oral or written statements dealing with the subject matter herein. The Agreement can be amended or modified by the written consent of the Parties.
(E) Severability. If any one or more of the provisions of the Agreement (other than the provisions of Section 7) shall, for any reason, be illegal or invalid, such illegality or invalidity shall not affect any other provision of the Agreement and the Agreement shall be enforced as if such illegal or invalid provision had not been contained herein.
(F) Headings. All headings used herein are for ease of reference only and in no way shall be construed as interpreting, decreasing or enlarging the provisions of the Agreement.
(G) Applicable Law; Forum. The laws of the State of California shall govern the Agreement in all respects, including but not limited to the construction and enforcement thereof, unless otherwise preempted by federal law.
(H) Arbitration Agreement. To the extent permitted by law, all controversies between either the Plan Sponsor and/or the Named Fiduciary and EFA, which may arise out of or relate to any of the services provided by EFA under the Agreement, or the construction, performance or breach of this or any other agreement between EFA and the Plan Sponsor or Named Fiduciary, whether entered into prior to, on or subsequent to the date hereof, shall be settled by binding arbitration in the State of California., under the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator(s) shall be final, and may be entered into any court having jurisdiction.
(I) Amendment Process. The Agreement may be modified, including without limitation the services to be provided by EFA or the compensation charged by EFA, in the manner set forth below.
(i) EFA may propose to increase or otherwise change the compensation charged, to change the services provided or otherwise modify the Agreement by giving the Named Fiduciary thirty (30) days advance written notice of the proposed change. The notice shall be given in the manner described in the Agreement. The notice will (1) explain the proposed modification of the compensation, services or other provisions; (2) fully disclose any resulting changes in the compensation to be charged as a result of any proposed change in the services or other changes to the Agreement; (3) identify the effective date of the change; (4) explain Named Fiduciary’s right to reject the change or terminate the Agreement; and (5) state that pursuant to the provisions of the Agreement, if the Named Fiduciary fails to object to the proposed change(s) before the date on which the change(s) become effective Client will be deemed to have consented to the proposed change(s).
(ii) If the Named Fiduciary objects to any change to the Agreement proposed by EFA, EFA shall not be authorized to make the proposed change. In that event Client shall have an additional sixty (60) days from the proposed effective date (or such additional time beyond 60 days as may be agreed by EFA) to locate a service provider in place and instead of EFA. If at the end of such additional sixty (60) day period (or such additional time period as agreed by EFA), the parties have not reached Agreement on the proposed changes, the Agreement shall automatically terminate.
(J) Waiver of Limitation. Nothing in the Agreement shall in any way constitute a waiver or limitation of any rights which the Plan Sponsor, Named Fiduciary, EFA or any other party may have under ERISA or federal or state securities laws.
(K) The Parties may execute this Agreement in one or more counterparts, and each fully executed counterpart shall be deemed an original.
The Plan Sponsor, Named Fiduciary and EFA have caused the Agreement to be executed by their respective duly authorized representatives as of the latest date set forth below.
______________________________________________________ (“Plan Sponsor”)
By: _____________________________ Date: _________________
____________________________________________________ (“Named Fiduciary”)
By: _____________________________ Date: _________________
ERISA FIDUCIARY ADMINISTRATORS LLC (“EFA”)
14 Corporate Plaza, Suite 120
Newport Beach, CA 92660
By: _____________________________ Date: _________________
1. Select, monitor, evaluate and (where necessary after consultation with the Named Fiduciary or Plan Sponsor) replace the plan’s third party administrators, document preparers, record-keepers, custodians, directed trustees, consultants, accountants, legal counsel, and other non-fiduciary service providers not directly engaged in investing plan assets;
2. Review, sign and file all required government filings, conduct fiduciary committee meetings, maintain meeting minutes and records and keep all inside fiduciaries apprised of relevant legal matters;
3. Review all vendor ERISA Sec. 408(b)(2) fee disclosure data and coordinate annual fee benchmarking study for evaluation of the reasonableness for vendor fees;
4. Negotiate service agreements with these vendors, review all revenue sharing arrangements between mutual fund companies and vendors, audit and authorize the payment of their fees and oversee the distribution of plan benefits;
5. Maintain the tax-qualified status of the plan document, working with the appropriate service provider to ensure that the plan is operated in accordance with its terms and that the plan sponsor timely adopts all mandatory plan amendments and, as appropriate, obtains all government determinations;
6. Act as agent for service of legal process for the Plan and represent the plan and oversee all communication with all government agencies, including the IRS and/or the U.S. Department of Labor;
7. Review work products provided by all vendors performing plan administration services for accuracy and timeliness;
8. Provide solutions that reduce plan administration costs by uncovering hidden, or unjustified fees, independence problems and other conflicts of interest, service provider malfeasance, plan design problems and contract performance issues;
9. Submit quarterly fiduciary monitoring reports to the plan sponsor documenting fiduciary decision-making, management and operations; and
10. Submit annual certifications to the board of directors that all administrative activities have been properly carried out regarding plan compliance and governance.
[EFA’s Compensation shall be a flat fee payable either monthly or quarterly, which shall be determined after EFA conducts a due diligence compliance review covering the three immediately preceding plan years and obtains an estimate of the cost of fiduciary liability insurance coverage.]
Summary of Compensation Disclosures
Description of the services that EFA will provide to the Plan.
Schedule A, page 8 of the Agreement.
A statement concerning the services that EFA will provide as an ERISA fiduciary.
Section 3, pages 1-2 of the Agreement.
Compensation EFA will receive from the Plan (“direct” compensation).
Section 4, page 2 and Schedule B, page 9 of the Agreement.
Compensation EFA will receive from other parties that are not related to EFA (“indirect” compensation”).
Section 4, paragraph (C), page 2 of the Agreement.
Compensation that will be paid among EFA and related parties.
Section 4, paragraph (C), page 2 of the Agreement.
Compensation EFA will receive if you terminate the Agreement.
Section 9, page 4 of the Agreement.
The cost to the Plan of recordkeeping services.
Not Applicable. EFA does not provide recordkeeping services to the Plan.
Fees and Expenses relating to the Plan’s investment options.
Not Applicable. EFA does not provide services to the Plan relating to the selection, retention or modification of its investment options.
Consent to Appointment as Fiduciary for Plan Administration
In accordance with the terms of the Agreement, EFA hereby consents to its appointment as the Fiduciary for Plan Administration for the [name of Plan] commencing effective _____________________.
ERISA FIDUCIARY ADMINISTRATORS LLC (“EFA”)
By: ______________________________________ Date: _________________