This report, designed to provide a better understanding of retirement plan 3(16) administrative responsibilities and corresponding risks, provides recommendations and guidance for managing these important duties.

1. The Pentegra 3(16) Administrator
SMARTPATHTM
The Path to Simpler, Safer, Easier Plan Management

3. Good retirement plans can be complicated. But servicing them doesn’t have to
be. The multitude of filings, administrative duties and attention required to
manage a retirement plan can be overwhelming and make it a rough road for
you and your clients.
Pentegra’s 3(16) fiduciary outsourcing solution makes the path simple.
Today, many providers say they provide 3(16) services. Some take responsibility for
a handful of tasks. At Pentegra, we sign the plan document and 5500, not only
performing these duties but accepting responsibility for them.
Think of it as straightening out a curve filled, risky road.
THE PENTEGRA 3(16) ADMINISTRATOR SMARTPATH™

4. 2 Pentegra
Time is Money
How much time in a given day are your clients taking to manage their retirement plans?
And how much time are you spending resolving retirement plan administrative issues for your clients?
Today, retirement plan administration has become increasingly complex and laden with compliance burdens.
For many employers, the commitment of time and energy is overwhelming and too often distracts from the more
critical responsibility of running a business. As an advisor, it’s a distraction from your business as well.
And when it comes to the fiduciary oversight of a retirement plan, while most plan sponsors are the Named Fiduciary
of their plan, the truth is that they aren’t aware of the myriad of responsibilities that come with that role, or that these
responsibilities involve significant risk.
Understanding and handling these responsibilities is time away from their business and yours. Time that could be
better spent focusing on growth and profitability. For both you and your clients, time is money.
There’s an easier way. Outsourcing.
Fiduciary outsourcing involves the transfer of legal responsibility for a retirement plan from an employer to an
institutional fiduciary.
Pentegra’s 3(16) Fiduciary Administrator services shifts these burdens from your client’s organization to ours.
Our 3(16) Fiduciary Administrator services allow you to reduce your administrative burdens by not only handing
off these tasks to us, but also handing off the responsibility for ensuring that they are handled well.
It’s the SmartPath™ to plan administration.

5. There’s an easier way. Outsourcing.

6. Which Business Model Is Right for Your Clients?
Do your clients understand the difference between a third party administrator (TPA) and a ‘first’ party administrator?
Many providers say they provide 3(16) services. Some take responsibility for a handful of tasks. At Pentegra, we,
not only perform these tasks, but also accept responsibility for them. That’s the Pentegra difference. We are a ‘first’
party administrator—we provide TPA services and serve as a true 3(16) administrator.
With a legacy built serving as an institutional fiduciary for more than 75 years for thousands of retirement plans
nationwide, Pentegra offers a level of 3(16) service that is unmatched in the industry today.
TPA & Separate
Fiduciary
An independent fiduciary is appointed as named fiduciary and/or 3(16) administrator as an added layer
in the plan document and other governing documents and contracts. The fiduciary is not the TPA or
recordkeeper, but becomes the party responsible for prudently selecting and monitoring the TPA
and/or recordkeeper.
Under this approach, the TPA—the party doing the actual work—is still not a fiduciary.
The TPA as 3(16)
Fiduciary Administrator
A “First” Party
Administrator
The TPA and/or recordkeeper—is appointed as the named fiduciary and/or 3(16) administrator.
The key advantage of this approach is the ability to outsource these responsibilities because under a
true 3(16) arrangement, the party doing the work is also the party accepting responsibility for doing
it properly.
Non-Fiduciary TPA The non-fiduciary TPA offers supplemental services such as document mailings or hands-free
distribution processing, but does so as a non-fiduciary or accepts very limited fiduciary
responsibility for certain tasks only.
While this is often a low cost approach, the employer retains the bulk of the legal
responsibility and therefore much of the labor and all of the fiduciary responsibility.
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7. An unmatched level of Oversight.

8. What makes an ERISA 3(16) fiduciary so important?
Contrary to common belief, most plan mistakes that occur have little or nothing to do with the investments
or the investment manager, but instead, involve plan administration issues. Some of the top mistakes that
occur include:
• Plan document not updated to reflect law changes
• Failure to follow plan terms
• Not using the plan’s definition of compensation for deferrals and allocations correctly
• Employer matching contribution errors
• Not satisfying non-discrimination tests (ADP & ACP)
• Not notifying all eligible employees of their opportunity to defer
• Not complying with IRC Section 402(g)
• Not depositing employee elective deferrals in a timely fashion
• Hardship distribution issues
• Not making required minimum contributions for top-heavy plans
• Not filing a Form 5500 series return and not distributing a Summary Annual Report to all participants.
By hiring a competent ERISA 3(16) fiduciary, plan sponsors are insulating themselves against these errors to a
greater level than a typical TPA arrangement provides.
As a 3(16) Plan Administrator, Pentegra assumes full responsibility for managing the day-to-day
operations of the plan, and shifts the legal and operational burdens of the Plan Administrator
role from your organization to ours.
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9. Shift legal and operational burdens.

10. The Pentegra 3(16) SmartPath™ Advantage
A Solution that Takes These 50 Responsibilities Off Your and Your Client’s Plates
1. Overall operational compliance
2. Document compliance, mandatory
interim amendments, restatements
3. Form 5500
4. Annual plan audit, if applicable
5. New hire processing
6. ERISA bond
7. ACA (automatic enrollment)
administration
8. ACI (automatic contribution increases)
administration
9. Default investment administration
10. Determination of vesting and amount
of distribution
11. ERISA section 105 employee benefit
statements
12. Reasonableness of fees
13. Prudent selection and monitoring of
service providers
14. Benefit determinations and disputes
15. Administration of beneficiary rules
16. Worker classification
17. Nondiscrimination testing
18. Summary Annual Report (SAR)
19. Definition of compensation
20. Allocation of unallocated monies
by plan year- end
21. IRC section 72(p) loan administration
22. Contribution calculations and limitations
23. Protected benefits
24. Acceptance or rejection of rollovers
or transfers
25. Annual notices
26. Segregation of assets by source
27. Coverage testing and corrections
28. Involuntary distributions
29. Episodic notices
30. Distributions
31. Hardship withdrawals
32. Qualified Domestic Relations Orders
(QDRO)
33. Lost/missing participants and unclaimed
benefits
34. Grandfathered plan provisions
35. Plan termination and partial termination
36. Spousal consents
37. Survivor benefits, (QJSA and QPSA)
38. Summary Plan Descriptions and Summaries
of Material Modifications (SPD and SMM)
39. Timely remission of deferrals and loan
repayments
40. Timeliness of other required contributions
41. Diversification requirements for plans with
employer securities
42. Blackout procedures
43. Defined benefit plan duties
44. Participant fee disclosure (404a-5)
45. Fiduciary fee disclosure (408b-2)
46. Records retention under ERISA Sections
107 and 209
47. Responding to participant inquiries
48. Top-heavy minimum benefit
49. Overpayments
50. Personal liability under ERISA
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11. Simpler, safer, easier plan management.

12. Plan Operational Oversight
and Compliance
• Accept responsibility under ERISA
404(a)(1)(D) for ensuring that the plan
is operated in accordance with the
terms of the plan document subject
to the fulfillment of any responsibilities
retained by the employer
• This is an extremely broad
responsibility: “operational compliance”
is a catch-all term covering nearly
everything that can go wrong in a
retirement plan
• Includes the many requirements that
must be met for a plan to be “qualified”
for tax purposes
• Ensure proper documentation and
ERISA 107/209 records retention
Pentegra’s 3(16)(A) Fiduciary Administration Services
Plan Document Administration
• Prepare plan document and ensure
compliance with applicable laws
• Prepare plan adoption and trust
agreements
• Prepare plan qualification package
• Ensure plan document is amended
as required by new laws, regulations,
and mandatory restatements
• Obtain favorable letters of
determination
• Maintain records of historical
plan documents
New Hire and Termination
Processing
• Identify eligibles based on plan
provisions and employer-provided
data and automatically mail packet to
address of record
• Administer auto-enroll provisions
• Complete, up-to-date enrollment
materials
• Online enrollment process with live
telephone backup
Distributions and QDROs
• Review and ensure the qualified status
of domestic relations orders (DROs)
• Ensure that alternate payees are given
their ERISA participant rights
• Review and approve distributions,
including determinations of disability,
death, retirement, or other
distributable events
• Ensure that the appropriate notices are
delivered and that the tax withholding
rules are properly applied
Hardship Distributions
• Cross-reference plan document rules
since each plan may be different
• Test for both existence and amount
of need
• Take only from allowable sources
and only after exhausting loans and
in-service distributions
• Suspend deferrals for six months and
reinstate promptly when applicable
• Keep careful documentation of every
distribution for the ERISA 107 period
Loans and Loan Repayments
• Establish written loan policy as
supplement to plan document
• Review and approve loans; remove
employer from loop except for
payroll deductions
• Ensure amortization periods match
actual payroll implementation
• Ensure each loan agreement is
executed and documented
• Enforce quarterly deadlines and
deemed distribution requirements
Participant Fee Disclosure
• Compliance with DOL Reg. Sec.
2550.404a-5
• Gather fee information from third
parties and collate the data to create
the plan’s disclosure documents
• Ensure timely delivery of disclosures
annually and to newly eligible
employees in accordance with the
DOL’s rules on document delivery
Forfeitures and Suspense Accounts
• Ensure that all unallocated monies are
used to offset employer contributions,
pay plan expenses, or are allocated to
participants by plan year end
• Includes revenue sharing held within
the plan, monies returned to the plan
such as expense reimbursements,
forfeitures, demutualization proceeds,
legal settlements, etc.
Corrections and E&O
• SCP, VCP, Audit CAP, DFVCP, and VFCP
calculations, preparation of government
submission, follow-up, and
implementation of corrections
• Maintain an E&O account for trusteed
plans to ensure an audit trail for
corrections
• Maintain insurance and reserves at
appropriate levels at or in excess of
regulatory requirements
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13. Service Provider Selection and
Oversight
• Prudent hiring of service providers not
appointed directly by employer such as
auditor and custodian
• Review vendor fee disclosures and
ensure reasonableness of fees
• Regular monitoring of Pentegra-
appointed service providers to ensure
they remain prudent and fees remain
reasonable
Contributions
• Establish and enforce ERISA 402
funding policy for timing of remittances
• Maintain proper source accounts and
tax basis
• Ensure proper investment of
contributions of “defaulted”
participants
• Ensure rollovers into the plan are from
qualified sources
Participant Notices, Statements
and Disclosures
• Preparation of notices and
disclosures such as SPD, SMM, SAR,
404(c), QDIA, ACA, Safe Harbor,
and 402(f); contrast with how a
non-fiduciary TPA provides a
boilerplate document the employer is
supposed to review and approve
• Ensure document delivery compliant
with DOL rules on electronic
disclosure
• Includes beneficiaries, alternate payees,
and other “interested parties”
Compliance Testing
• Determine plans to include for
compliance testing
• 401(a)(4) Nondiscriminatory
Allocations
• 401(a)(9) RMD
• 401(a)(26) Minimum Participation
testing
• 402(g) Excess Deferrals
• 404 Maximum Deductible
Contributions
• 410(b) Minimum Coverage testing
• 414(s) testing for non-safe harbor
compensation
• ADP/ACP testing
• 415 Annual Addition testing
• 416 Top Heavy testing
• Nondiscriminatory Benefits/Rights/
Features
• Determine Highly Compensated
Employees and key employees
• Prepare comprehensive compliance
reporting package
• Provide detailed analysis of testing
results
• Develop corrective scenarios in the
event of test failures
Government Filings
• Prepare and submit filings such as Form
5500 Annual Report with applicable
Schedules, Form 5558 extensions,
Form 5330 prohibited transaction
tax reports, PBGC premium filings,
and more
• Tax reporting, state and federal,
including 1099-R, 1096, 945, and
1099-MISC
Annual Plan Review Process
• Establish plan governance process and
checklist
• Provide completed checklist and annual
review report annually
• Review service provider performance
and fees
Claims and Benefit Determinations
• Establish and administer ERISA-
compliant claims process
• Verify identity of beneficiaries
• Make benefit determinations in
accordance with the plan document
and ERISA
• Ensure QJSA/QPSA rules are met and
proper waivers obtained, including
spousal consent on all loans and
distributions with respect to protected
sources
Plan Audit
• Select and monitor plan auditor in
accordance with joint DOL/AICPA
guidelines
• Negotiate volume discounts
• Serve as primary liaison with auditor;
remove employer from loop to the
maximum extent possible
• Prepare plan financial statements to
meet the letter of AICPA independence
guidelines
• Obtain and make available SOC I and II
audits on internal controls to allow for
a limited scope audit

14. Make Our Expertise Your Expertise and Deliver Added Value for Your Clients
With Pentegra’s 3(16) administrator services, you can partner with a professional fiduciary to relieve plan
sponsors of real work, time and liability.
• Partner with one of the most experienced 3(16) Administrators in the nation
• Deliver comprehensive retirement plan administrative support
• Outsource ERISA 3(16) fiduciary administrator services to help both you and your clients comply
with retirement plan fiduciary obligations
• Benefit from the services of an experienced team and the deep bench strength of an
institutional fiduciary
• Spend more of your time on participant retirement readiness
• Integrate across many platforms to bring recordkeeping flexibility to every opportunity
• Share a new solution that is different than the usual talk about funds and fees
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15. Make the path simple for your clients.

16. Partner with Pentegra to make the path simple.
Our team brings experience, expertise and above all, collaboration to every opportunity to deliver retirement
plan and fiduciary outsourcing solutions that genuinely add value for you and your clients.
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18. Contact the Pentegra Solutions Center at solutions@pentegra.com
or 855.549.6689 or visit us at www.pentegra.com
Let us help you achieve your goals.

20. 2 Enterprise Drive, Suite 408, Shelton, CT 06484-4694 800•872•3473 tel 203•925•0674 fax www.pentegra.com
© 2018 Pentegra All Rights Reserved