Fiduciary Obligations
As the employer, you need to understand that you are the fiduciary of the plan as defined by Employee Retirement Income Security Act (ERISA).
These responsibilities include:
• Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
• Carrying out their duties prudently;
• Following the plan documents (unless inconsistent with ERISA);
• Diversifying plan investments; and
• Paying only reasonable plan expenses.
Lawsuits are flourishing. Last year, the Department of Labor (DOL) investigated 3,500 civil suits, with 4 out of 5 resulting in $1.2 billion in fines. The risk for employers comes hidden fees, revenue sharing funds and non-diversified plan investments.
You Might Have a Problem with Your 401k Plan When…
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Hire a co-fiduciary to share the responsibility and perform the required ERISA due diligence.
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Have an open-architecture plan with a transparent fee structure and diversified plan investments.
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Hire an outside Registered Investment Advisor to oversee investments and educate participants.
Useful Potty Reading Resources
Department of Labor Guide to Fiduciary Responsibilities