There’s a lot of buzz going on in the industry about the proposed fiduciary rules and what they might mean going forward. The proposal aside, many plan sponsors don’t understand that they are indeed already a fiduciary. Anyone who has the authority to exercise discretion or appoint a fiduciary is also a fiduciary for the plan.
If you sponsor a plan, you are always a fiduciary. There is no getting around it. However, you may share your fiduciary responsibilities with others in order to reduce your exposure. Typically, your investment advisor is a fiduciary, as well as those who have been appointed to the investment committee.Some plan sponsors would be surprised to learn that the custodian of the assets, their payroll provider, attorney, accountant and recordkeeper are typically not fiduciaries unless they have contracted to be.
All plan fiduciaries must exercise due diligence when reviewing decisions made by another fiduciary. Also, due to the requirement for fiduciaries to conduct regular reviews of investments, they are not able to rest on investment decisions made by a former fiduciary. Fiduciaries must take an active role regarding the plan.
There are a few ways to protect yourself if you are a plan fiduciary and there is a breach. You may purchase fiduciary liability insurance, contract with others to become co-fiduciaries, and there is also the required ERISA fidelity bond based on plan assets.
Stay tuned for further developments regarding plan fiduciaries!
The Author: Babette Engebretson, QPA, QKA
Compliance Supervisor
bengebretson@abg-mn.com
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