You’re a Plan Fiduciary – Now What?

As a plan fiduciary, you are charged with overseeing plan management with the goal of providing a good plan for your employees.

Plan management includes selecting and monitoring plan investments, selecting and monitoring plan service providers, assisting employees in preparing for a successful retirement, and the administration of the plan.Each area of plan management will require fiduciaries to use discretion that may impact the participants in the plan and their beneficiaries.

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Vendor Monitoring: Going Beyond the Determination of Reasonableness

As a responsible plan fiduciary (RPF),  the Employee Retirement Income Security Act (ERISA) requires you  under Section 408(b)(2) to ensure that arrangements with your service providers are “reasonable” and that only “reasonable” compensation is paid for their services.  To ensure RPFs were provided the information they needed to make better decisions when selecting and monitoring service providers for their plan, the Employee Benefits Security Administration (EBSA) estimated that the final rule would cost approximately $207 million1. Continue reading

A Guide to Fiduciary Prudence, Part 4: Establishing and Operating a Committee Meeting To Ensure ERISA Compliance

In continuation of our fiduciary prudence series, the next issue of importance in complying with one’s duties as a plan fiduciary should be establishing and maintaining a retirement plan committee. The following questions will be answered in this blog post:

1. How can a retirement plan committee help manage the fiduciary oversight of a plan?
2. Who makes a good retirement plan committee member?
3. What should a committee meeting agenda be comprised of and how should committee meetings be properly memorialized?

So let the fiduciary governance discussions begin!

How can a Retirement Plan Committee help manage the fiduciary oversight of the plan?

As you may know, serving as a plan fiduciary can be a daunting task, one with a lot of risks and requirements. In fact, there are so many requirements and such a concern of risk, that one common way to reduce the fiduciary burden on one individual is by spreading the wealth of duties to other qualified individuals through the formation of a retirement plan committee. Continue reading

A Guide to Fiduciary Prudence: Part 3, What are the risks of being a plan fiduciary?

In our previous blog in the Guide to Fiduciary Prudence series, we discussed the many roles and responsibilities involved in one’s role as a plan fiduciary. This post will discuss the risks inherent in this fiduciary position. Someone may be a fiduciary because of the role he/she in fact plays for a plan, even though he/she:

  • May not know he/she is a fiduciary and did not intend to become one; and
  • Within his/her contract with the employer or the plan administrator, stipulates that he/she is not a fiduciary.

It is clear that whether an ERISA fiduciary named within the plan or one deemed as such through his/her actions, various duties are required to be followed. Failure to comply with these duties—whether a failure by action or omission—may result in personal liability or maybe co-fiduciary liability, and if egregious enough, may even result in criminal liability. These forms of liability have been laid out, below: Continue reading

A Guide to Fiduciary Prudence: Part 2, What are the Roles and Responsibilities of a Plan Fiduciary?

Thanks to the first blog post in our fiduciary prudence series, you already know that if you are either named as a fiduciary or act in a manner where you are functioning as one (e.g., you answered “yes” to the question “Do I have the discretionary authority over the management of plan assets or over the administration of the Plan?”), you are a fiduciary.

But now what? After determining fiduciary status, it is imperative that you understand your roles and responsibilities as a plan fiduciary.

First and foremost, it is important to know when these roles and responsibilities begin. Your role as a fiduciary begins at the inception of the plan. Once an employer decides to sponsor a plan—which in and of itself is NOT a fiduciary decision—the roles and responsibilities of a fiduciary are born.

Now that you know when your role begins, it is essential to understand what roles and responsibilities exist as a fiduciary. Continue reading

A Guide to Fiduciary Prudence: Part 1, Who is a retirement plan fiduciary?

Like many people, I am a plan fiduciary to my employer’s 401(k) plan. Because of my background in employee benefits law, I am keenly aware of the role, risks and responsibilities associated with this fiduciary status under ERISA.  Some people, however, are unaware that they are a plan fiduciary while others may be aware of their fiduciary status, but do not fully understand the scope of the risks, liabilities, duties and responsibilities that they have assumed as a result of their relationship to a retirement plan.

I will be writing a blog series in the coming months to help clarify some of the issues simply being a plan fiduciary present, and will help bring to light how potential risks may be mitigated. Several key elements should be addressed to help you properly manage your fiduciary responsibilities, and will therefore be topics in this blog series:

  1. Who is a plan fiduciary? Continue reading