RETIREMENT PLAN FIDUCIARIES | Identifying Fiduciaries in Your Organization
-
Those responsible for the management of the plan and plan assets.
-
Those named in the plan.
-
Those who render investment advice for a fee.
-
Those who provide discretionary oversight of the plan’s administration.
RESPONSIBILITY | What Are Your Duties as a Fiduciary?
LOYALTY
Learn More
This is also known as the exclusive benefit rule, which means you must act in the best interest of the plan participants and their beneficiaries. You must never put the company interests first when dealing with retirement plan fiduciary issues.
PRUDENT
Learn More
This is the reasonable person standard. The question fiduciaries must ask is, would 51/100 plan fiduciaries faced with the same question make the same answer? Having a process and documenting the process on everything plan related makes it much easier to show the decisions are prudent.
FOLLOW PLAN DOCUMENTS
Learn More
As a fiduciary you must ensure that the plan documents are being followed. This means the adoption agreement provisions that cover eligibility, vesting, etc. and ancillary documents like investment policy statements. Make sure you have read the plan documents so you can know if you are following them.
PAYING REASONABLE PLAN EXPENSES
Learn More
Three questions that a fiduciary must be able to answer: 1) What are the expenses? 2) What are the services being received for the expenses? 3) Are the expenses reasonable? You must be able to benchmark or compare your fees to something similar.
DIVERSIFICATION
Learn More
The plan must have at least three investment options offered to their participants. Most plans have many more than three, so this duty is easy to meet.
LIABILITY | Three Areas of Concern
- Department of Labor Investigations
- Internal Revenue Service Audits
- Lawsuits by Plan Participants
LIMITING LIABILITY | How to Minimize Your Risk
- Know Your Role and Responsibility
- Have a Process for All Things Related to Your 401(k) Plan and Document the Process
- Understand Your Capacity and If Needed:
- Delegate Responsibilities
- Hire a Service Provider Like Central Trust Company
REMEMBER: The Process is More Important Than the Result!
RECENT RETIREMENT PLANNING INSIGHTS | Helping You Understand Your Role and Responsibilities
