Many positions in a company can have retirement plan fiduciary responsibility, including the owner, CEO, CFO, human resources personnel or benefits/retirement committee.  Fiduciary responsibility is based on the functions performed for the plan, not a title.  Some plan administrators may not even know they qualify as a plan fiduciary; they may believe they are protected if they hire a service provider to be a third-party administrator (TPA).  The basic rules that need to be understood are in the Employee Retirement Income Security Act (ERISA).   ERISA is monitored and enforced by the Department of Labor.


Plan administrators may delegate their responsibility but they cannot abdicate total responsibility; they still must act with the same care, skill and diligence that a prudent person acting in similar capacity would exercise.


The essential elements of a retirement plan are a written plan, a trust fund to hold the plan assets, a recordkeeping system to track the inflow and outflow of monies; and documents to provide plan information to participants and government.


There are several areas that employers should address to meet their plan’s fiduciary responsibilities.

·         Identify plan fiduciaries;

·         Provide plan and investment related information to participants;

·         Be aware of schedule to deposit participants’ contributions;

·         If hiring a TPA, look at several providers and compare fees;

·         Document the hiring/enrollment process;

·         Monitor plan’s service providers;

·         Identify parties in interest and monitor transactions with them;

·         Be aware of major exemptions under ERISA;

·         Review plan documents and make necessary updates; provide any updates to plan participants;

·         Secure a fidelity bond


Plan fiduciaries should address the following issues to fulfill their fiduciary responsibilities.


Establish an Oversight Committee

The size and complexity of your plan will determine the makeup of the committee but should at least consist of the plan trustee(s) and those responsible for making plan decisions.  The committee should be monitoring if the plan is operating effectively and in best interests of plan participants.  There should be regular meetings with minutes taken.


Maintain a Fiduciary File

All plans should maintain at least the following:

·         Plan document

·         Adoption agreement

·         IRS determination letter

·         Investment policy statement

·         Meeting Minutes

·         TPA agreements or contract, if applicable

·         All insurance contracts held by plan

·         Fidelity bond policy coverage

Monitor Investment Performance and Plan Fees

Most employers do not have investment personnel on staff or dedicated personnel for the plan.  Engage a qualified investment adviser to monitor performance and fees.  The 408(b)(2) fee disclosures should be part of the annual review.


Manage Relationships with TPAs

Hiring of qualified plan service providers, monitoring services and understanding their fees is the responsibility of the plan fiduciary. 


Address Pension Plan Liabilities

Defined benefit plans create long-term liabilities for employers.  These liabilities will fluctuate depending on the performance of the investments of the plan.


Plan fiduciaries can prevent many problems with proper plan oversight.  Additional resources may be found in the Department of Labor’s Meeting Your Fiduciary Responsibilities Guide

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