3(16) Signing Plan Documents

[austin3515]

Can a 3(16) Admin sign discretionary amendments on behalf of a client?

[QDROphile]

A person who has amendment authority (plan sponsor) can delegate that authority.  The delegate can amend within the scope of the delegated authority.  It is a very bad idea to delegate a settlor function (amendment) to a fiduciary.  The fiduciary is required to act in the best interests of the participants and beneficiaries, which is a responsibility that is not a settlor function.   That can create a conflict for the fiduciary, and one could argue that the fiduciary should decline to accept simply on principle.  One can argue against the purist approach in certain circumstances such a purely formal amendments or emergency situations (e.g. required amendment deadlines), but I am skeptical.  A fiduciary has no inherent authority to amend unless provided in the plan document (which is also a form of delegation).  So, if you want a short answer to a bare question, no.

[austin3515]

So it sounds like we are on the same page that the response I got (which is that the 3(16) can sign a particular amendment) sounds odd... Esentially your point is it is possible in theory but should definitely be avoided.  I agree... 

[QDROphile]

If your question is, can a fiduciary (or an administrative agent), purely as a matter of documentation, sign an amendment that has been properly adopted by the plan sponsor, then, yes, if the plan sponsor authorizes the execution by the fiduciary (or agent).  It is still a bad idea to mix settlor, administrative, and administrative functions, but not as bad as circumstances involving judgement or discretion. 

[austin3515]

"sign an amendment that has been properly adopted by the plan sponsor"

In other words, the plan sponsor signs the Adopting/Board Resolution approving the amendment.  Then the 3(16) can sign the amendment.  Is that the idea?

That makes sense to me because it is now documented that it is a sponsor action.  Of course I would not be able to explain why the sponsor would not just sign both, but there you go.

Thanks!

[QDROphile]

Yes, your example fits my statement, assuming that the words of the amendment are also prepared or approved by the sponsor.

Your puzzlement about the need for having the “3(16)” sign under the circumstances matches my skepticism about the need for the “3(16)” to be involved.

[Bri]

There's a "'Cuz Stone Cold Said So" crack to be made by a wittier person than I, in the context of an Austin 3(16) question.

[QDROphile]

And a publication called “Cracked” was a one-time competitor of “Mad” .... H’mmm.

[RatherBeGolfing]

41 minutes ago, QDROphile said:

And a publication called “Cracked” was a one-time competitor of “Mad” .... H’mmm.

[Luke Bailey]

What you all said, and also (a) it's very unusual for someone other than an officer of plan sponsor to have the delegated authority, (b) it's very unlikely there is a formal delegation of authority (boilerplate board resolutions will probably authorize "any officer" to execute amendment, not any plan fiduciary), (c) whoever is proposing this is probably just "making it up."