You’ve hired an outsourced provider for your DC plan, now what? In our last article, "Fiduciary outsourcing: What liability does the sponsor retain?," we addressed the question: "How much of what I do now can I stop doing after outsourcing is implemented?" In the "maximal" situation, where decision-making is ceded to the outsourcing provider (sometimes called ERISA 3(38) outsourcing), we said the named fiduciary's "residual" fiduciary responsibility is generally limited to the prudent selection and monitoring of the outsourcing provider.

In this article, we discuss just what prudent selection and monitoring of an outsourcing provider involves.

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