I am the Settlor of a Retirement Plan…What do I do Now?

Last Updated: October 27, 2015

Protecting the Employer – Part 2

Part 1 of this series looked at the trust law roots of the Employee Retirement Income Security Act of 1974 (“ERISA”), focusing on determining who is considered the “settlor” of a retirement plan. Once the individual or group of individuals acting as the settlor of a plan have been identified, it is important to understand what their role is, and equally important what their role is not.
It is first important to understand that settlor decisions are not fiduciary decisions, and do not carry with them the same high standards of conduct that fiduciary decisions do. Settlor decisions are business decisions that do not, for example, have to be made in the best interest of plan participants. Settlor decisions include:
  1. The decision to sponsor a plan
  2. The decision to voluntarily amend a plan
  3. The decision about what benefits to provide through the plan
  4. The decision to terminate a plan
It is important to note that although the four types of decisions listed above are “settlor decisions,” and therefore do not create fiduciary liability for those involved in making these decisions, the implementation of these decisions is a fiduciary act. For instance, the settlor of a plan may decide to amend the plan in some way, and take the steps necessary to formally do so. If the settlor then begins to take actions to implement that amendment, they get pulled into the fiduciary realm with respect to those actions. This distinction between the decision which is settlor in nature, and the action to carry out the decision which is fiduciary in nature, is important for all settlors to remember when trying to protect themselves from fiduciary liability. It is common for a retirement plan committee to have both settlor authority over plan design, and fiduciary authority over plan administration. There is nothing necessarily wrong with this type of setup; however, it can create tension between a committee member’s role as a settlor and their duties as a fiduciary. Take a company’s CFO for instance. This is a person whose day-to-day job is to maintain the financial wellbeing of the company, but when acting as a fiduciary on a retirement plan committee they must make decisions in the best interest of plan participants. It’s easy to see how, at times, there may be a conflict between what is in the best interest of the company, and what is in the best interest of plan participants. In order to resolve the potential conflict between the interests of the employer on one side and the plan participants on the other side, it may be prudent to consider having two distinct committees. The Settlor Committee, which would be charged with making plan design decisions on behalf of the employer, and the Fiduciary Committee, which would be in charge of the administration of the plan. This type of dual committee structure allows the members of each committee to be un-conflicted in carrying out their respective duties, making decisions in the best interest of the employer in the case of the Settlor Committee, and in the best interest of participants in the case of the Fiduciary Committee. This is Part 2 of a series on the subject of Protecting the Employer. Through this series it will become clear why it is important to understand what individual or group of individuals is the Settlor of your Plan, what their role is as the Settlor, and perhaps most importantly what their role is not. If you have questions about identifying the settlor of your Plan, or the ongoing role that the Settlor plays after the creation of a Plan, contact our ERISA Services Team today.
PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.


Pension Consultants, Inc.



Read The First Chapter

Learn what it takes to build a successful retirement plan so your employees can retire on time and with dignity. A must read for any fiduciary.

We promise to never spam you or sell your information. For more, read our privacy policy or terms and conditions



A good plan measures
three key elements:
investments, and fees.


A good plan serves
employees and


Fiduciaries have a
responsibility to make
reasonable decisions
with their employees’
best interests in mind.

Ready to Evaluate Your Plan’s Performance?

How we can help


Speak with an adviser who can evaluate your plan in the three critical areas.


Understand how your current plan is performing.


Learn what you can do to improve your plan’s performance.