COLLECTED WISDOM™ on Fiduciary Responsibility and Liability Issues
Other topical areas you may find of interest that are not fully covered here include
ERISA 404(c) Compliance and Fiduciary Duty and
401k Investment Committees.
Who's on the Hook for Decisions Made in Your 401k? - Summary: If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a "hypothetical deposition" directed to you and picture how you would answer the questions.
Source: Forbes, February 2012.
What You Should Know About Fiduciary Status Under ERISA - Summary: The following presentation concisely describes the basic concepts of fiduciary status under ERISA, as well as the implications of being a fiduciary. Equally importantly, the presentation focuses on the differences in the types of investment fiduciaries — both investment advisory fiduciaries under Section 3(21) and investment manager fiduciaries under Section 3(38).
Source: Principal.com 
, January 2012.
2011 Retirement Plan Governance Survey - Summary: Yet the Towers Watson 2011 survey on qualified retirement plan governance finds that the process of decision making and oversight varies widely. While most employers are concerned with compliance, many are not taking all the steps available to manage the financial, organizational and other risks created by ineffective plan governance. A sizable number of employers, however, are getting the message.
Source: Towers Watson , December 2011.
Retirement Plan Governance: What Is It and Why Should You Care? - Summary: Retirement plan governance is about more than just fiduciary responsibility. Retirement plan governance is a dynamic process that requires continued attention and provides continued reward. With new laws, regulations, and court decisions influencing the evolution of good retirement plan governance, you should make plan governance review practice part of your regular routine.
Source: Principal , December 2011.
New Rules Will Have Fiduciary Impact - Summary: Next year, new federal rules requiring fee disclosures from 401k plan providers make it imperative for companies sponsoring plans to ensure that fees are reasonable. Employers that start preparing now for the new disclosure regime will be ahead of the game.
Source: HREonline.com, November 2011.
Reclaiming Fiduciary Duty Balance - Summary: Reclaiming fiduciary duty balance between prudence, loyalty and impartiality is critical to sustaining pension promises. It would encourage better alignment of pension service providers’ supply chain interests, adoption of fit-for-purpose pension fund governance practices, and implementation of precautionary risk management policies.
Source: Reinhart Boerner Van Deuren , October 2011.
Ten Things You're (Probably Still) Doing Wrong As an ERISA Fiduciary - Summary: Those who seek to know what they might be doing wrong are not generally the ones that need the "help." However, because the standards imposed on plan fiduciaries by ERISA are demanding, the potential to misstep without meaning to is ever-present. Here is a list of 10 thing to be aware of.
Source: Plansponsor.com, October 2011.
Fiduciary-Level Disclosures for ERISA Retirement Plans - Summary: Provides insight into the DOL's new fiduciary-level disclosure regulation, also the historical context and practical application of the regulation. In the paper, ERISA plan fiduciaries can find information regarding: An overview of the interim final regulation; types of fees and expenses included in the disclosures; timing of the required disclosures; and, a fee oversight checklist.
Source: MetLife , October 2011.
Meeting Your Fiduciary Responsibilities - Summary: To meet their responsibilities as plan sponsors, employers need to understand some basic rules, specifically the Employee Retirement Income Security Act (ERISA). ERISA sets standards of conduct for those who manage an employee benefit plan and its assets (called fiduciaries). Meeting Your Fiduciary Responsibilities provides an overview of the basic fiduciary responsibilities applicable to retirement plans under the law.
Source: 401khelpcenter.com, October 2011.
Fiduciary Responsibility Checklist - Summary: This fiduciary responsibility checklist is a handy tool for you to compare your plan against best practices. Completing the checklist may highlight areas where you should take further steps to help manage fiduciary liability associated with your plan.
Source: Putnam Retirement Services , June 2011.
Selecting a QDIA is a Fiduciary Decision - Summary: Since the Pension Protection Act of 2006 and the associated Qualified Default Investment Alternative (QDIA) Regulation were passed, many plan sponsors have added a QDIA option to their plans. Of the three choices for options, 1) age-based (target-date funds - TDFs), 2) risk-based (balanced funds), and 3) managed accounts, TDFs are the most popular to date by far. TDFs remain a work-in-progress and are but one of three choices for a QDIA. Making that choice is clearly a fiduciary decision and plan sponsors need to treat it as such.
Source: Fi360.com, June 2011.
Fiduciary Risk Mitigation: Six Best Practices for Retirement Plan Sponsors - Summary: Fiduciary risk mitigation should be an important concept for all plan sponsors and fiduciaries in helping assess, understand and isolate responsibilities and duties attributable to a fiduciary and aid the plan sponsor in showing they are meeting their obligations. There are several best practices that progressive sponsors have adopted to reduce the liability of both plan sponsors and individual fiduciaries.
Source: Lockton Financial Advisors , March 2011.
Document Fiduciary Responsibility - Summary: Maintaining and retaining documentation is one of the most important responsibilities of plan fiduciaries. Not only is it beneficial to have the appropriate documentation to support historical plan activities and participant elections, ERISA dictate strict retention requirements.
Source: WithumSmith+Brown , February 2011.
Plan Sponsors Can Minimize Fiduciary Liability With Adequate Fiduciary Education and Certification - Summary: A fiduciary education program can provide the in-house/named fiduciary with a basic knowledge of the rules of ERISA and the Internal Revenue Code with only a small time investment. That basic knowledge minimizes the potential for a failure to meet ERISA’s fiduciary standard. Completing a formal education program offers an additional advantage beyond gaining the necessary understanding of the rules. If the program offers a certificate of completion, it provides hard evidence that an in-house/named fiduciary that participates in the program has taken affirmative action to enable it to fulfill its fiduciary obligations under ERISA — and minimizes the potential fiduciary liability.
Source: Profit Sharing/401k Council of America, February 2011.
Fiduciary Status for Referrals - Summary: The DOL has proposed a new regulation to re-define fiduciary investment advice. The proposal broadly expands the activities that result in fiduciary status by virtue of giving advice. In addition, it formalizes a long-standing DOL position that the referral of an investment manager can result in fiduciary status for the adviser making the referral. As a result, if a solicitor's fee or finder's fee is paid to the adviser who makes the referral, that payment can be a prohibited transaction.
Source: Drinker Biddle & Reath LLP, February 2011.
ERISA Fidelity Bonds—Who Needs Them, and Who is Responsible for Securing Them? - Summary: ERISA requires that every fiduciary of, and every person who handles funds or other property of, an employee benefit plan, be bonded. This seems like a simple enough proposition. And yet, although the statute imposing the bond requirement has been in place for many years and the DOL has issued guidance to clarify the requirement, people still get confused regarding its scope and meaning.
Source: Drinker Biddle & Reath LLP, February 2011.
DOL Updates and Broadens Definition of Fiduciary - Summary: The DOL announced a proposed rule to update the definition of "fiduciary" to more broadly define the term as a person who provides investment advice to plans for a fee or other compensation.
Source: 401khelpcenter.com, October 2010.
Investment Committees: More Than the Sum of the Parts - Summary: Investment committees steward trillions of dollars in assets, and their ability to function effectively as a team can have a tremendous impact on the performance of those assets. This white paper discusses the potential pitfalls and biases of group behavior that can affect investment committees and explore how a committee can make the best use of its collective knowledge and diversity of experience.
Source: Arnerich Massena , October 2010.
Deciding What Kind of 401k Fiduciary a Plan Sponsor Wants to Be - Summary: It's important that employers consider their qualified plan fiduciary obligations carefully. Employers that choose to 'do it myself' have a high level of fiduciary responsibility for 401k investment option choices.
Source: 401khelpcenter.com, October 2010.
Ten Things You're Probably Still Doing Wrong As a Plan Fiduciary - Summary: A list that is a compilation based on experiences of a group of experts and a list of "Common Plan Mistakes" from the Internal Revenue Service.
Source: Planadviser.com, August 2010.
An Employer Checklist of 401k Plan Responsibilities Under ERISA - Summary: As plan sponsor, an employer must ensure that those considered ERISA fiduciaries fulfill their responsibilities. This article is a reveiws of subjects that can assist the employer sponsoring a 401k plan in avoiding or minimizing legal liability related to the plan.
Source: Duane Morris LLP, June 2010.
Items for Plan Fiduciaries to Consider When Selecting and Monitoring Target Date Funds - Summary: The American Benefits Council and the Investment Company Institute have identified a number of items that fiduciaries of defined contribution retirement plans may want to consider when selecting and monitoring target date funds. They are outlined in this letter to the Employee Benefits Security Administration.
Source: American Benefits Council , April 2010.
Unscrambling Fiduciary Confusion - Summary: In seeking clarity about the "type" of 401k professional it has retained, plan sponsors often find the answers they are given to be incoherent with a slant in favor of the 401k industry instead of plan participants. The residual fuzziness plan sponsors are left feeling about this topic is a source of significant irritation to them. This article attempts to unscrambling the fuzziness.
Source: 401khelpcenter.com, January 2010.
A 2010 Fiduciary Planning Guide for Plan Sponsors - Summary: This is a 2010 planning calendar designed to be used primarily by sponsors of single employer plans. Covers both DC and DB calendar year and non-calendar year plans.
Source: MassMutual , January 2010.
Fiduciary Focus: A Frank Discussion for Plan Sponsors - Summary: Sherryann Plessé, principal and head of Vanguard's Strategic Retirement Consulting team of defined contribution and defined benefit consultants, shares essential advice on fiduciary topics such as mitigating risk, offering advice, and managing fees -- so you can better understand your fiduciary responsibilities under ERISA.
Source: Vanguard, January 2010.
Conventional Wisdom, Fiduciary Duty and 401ks - Summary: 401k fiduciaries are in uncharted territory and pay heed to the advice of Robert Khuzami, director of the Securities and Exchange Commission's Division of Enforcement, that "it's better to be in the prevention business than the cleanup business." This article discusses steps fiduciaries should take to minimize the likelihood of successful lawsuits against them.
Source: Investment Horizons , December 2009.
Fiduciary Liabilities: Are You Covered? - Summary: With lawsuits piling up against pension plan sponsors, individual fiduciary would do well to protect themselves against financial risks, experts say.
Source: CFO.com, November 2009.
Conventional Wisdom and the Law of Unexpected Consequences - Summary: This paper on 401k fiduciary responsibility deals with proactive steps that fiduciaries should take to minimize successful breach of fiduciary lawsuits against them and the sponsor.
Source: Investment Horizons , October 2009.
Fiduciary Liability Insurance vs. ERISA Fidelity Bonds – What's the Difference? - Summary: This article addresses an issue that every plan sponsor should consider whether they have ever been sued or not. Specifically, the author talks about the issue of insurance, and more particularly, the distinction between fidelity bonds and fiduciary liability insurance.
Source: Drinker Biddle & Reath LLP, October 2009.
Improving the Effectiveness of Investment Committees - Summary: Recent market volatility and uncertainty have put a renewed focus on the role, governance, and fiduciary responsibilities of investment committees. This paper offers insights on how to bring clarity, self-awareness, discipline, and perspective to the investment committee process.
Source: Vanguard , September 2009.
Establishing a Fiduciary Due Diligence Process at 403(b)s - Summary: In a recent Webinar for 403(b) plan sponsors sponsored by Cammack LaRhette Consulting, Mike Webb, vice president, Retirement Plan Services at Cammack LaRhette, discussed considerations for establishing a fiduciary due diligence process and the benefits of having one.
Source: Planadviser.com, September 2009.
10 Steps to Ensure You'll Be in Fiduciary Hot Water - Summary: There are a few proven ways to make sure you'll end up in fiduciary hot water...follow these steps and you're sure to find an auditor at your door.
Source: Benefit Plans Plus, September 2009.
Thoughts on Properly Delegating Fiduciary Duties - Summary: Recognizing the high anxiety of today's ERISA fiduciaries, some plan service providers are offering to "share the fiduciary load" by stating in their service agreements that they are co-fiduciaries. But what does that really mean? This article explains that co-fiduciary status is, at best, a half measure.
Source: Jones Day , April 2009.
Offering Range of Funds Not a Fiduciary Protection - Summary: Offering a broad menu of funds or a brokerage window should not relieve 401k plan fiduciaries of the duty to prudently select investments, according to a Department of Labor brief filed in response to a recent appellate decision rejecting claims of excessive plan fees.
Source: Mercer, April 2009.
DOL Voluntary Fiduciary Correction Program - Summary: The Voluntary Fiduciary Correction Program is available to plan sponsors, officers, trustees, plan administrators, parties-in-interest or other persons, who may be liable for certain fiduciary breaches under the Employee Retirement Income Security Act. This publication describes the program as it stands today.
Source: Prudential , April 2009.
The Plan Sponsor's Ability to Evaluate Conflicts of Interest - Summary: The purpose of this white paper is to analyze the law relating to conflicts of interest that retirement plan fiduciaries may encounter in selecting the investments and service providers for 401k plans.
Source: Drinker Biddle & Reath LLP, March 2009.
Switching 401k and Other ERISA Plan Vendors - Summary: Plan fiduciaries may face risks, including personal liability, when corporate decisionmakers turn their attention to retirement and welfare plan administration as a source of savings in perilous economic times. The authors discuss some of the most notable areas for possible ERISA violations when fiduciaries face corporate cost-cutting pressures.
Source: Paul, Hastings, Janofsky & Walker LLP , October 2008.
Justifying 401k Fees: A Challenge for Fiduciaries - Summary: Underlying the current spate of lawsuits over 401k fiduciary misconduct (particularly fee levels, revenue sharing, self-dealing, and active versus passive management) is a simple question: Are participants getting their money's worth for the fees they pay? That seemingly simple question gives rise to a multitude of other questions which are anything but simple.
Source: Investment Horizons , September 2008.
Fulfilling Fiduciary Obligations Can Present Challenges for 401k Plan Sponsors - Summary: When acting as fiduciaries, they must act prudently and solely in the interest of plan participants and beneficiaries. The GAO administered a survey asking sponsors how they select plan features and oversee operations, reviewed industry research, conducted interviews, and reviewed related documents.
Source: Government Accountability Office , August 2008.
What Makes Me a Fiduciary? - Summary: Lately, the word on the street has been that retirement plan fiduciaries are being put under a high degree of scrutiny for their actions or, more importantly, their inactions. This article will help you determine if you are a fiduciary and what to do if you are.
Source: Milliman , February 2008.
Conducting a DC Plan Assessment - Summary: It is clearer than ever that DC plan sponsors can no longer afford to take a laissez-faire approach toward plan management. The plan fiduciaries must ensure they are doing everything they can to act exclusively in the interest of the plan's participants.
Source: Sibson Consulting, January 2008.
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