Navigating Fiduciary Terrain

In this session, Jonathan Young dives into the duties that a fiduciary has. The presentation is broken down into three sections: ERISA, best practices, and resources. A fiduciary is anyone who has authority over plan assets, there can be multiple, but the focus of this webinar is primarily the plan sponsor. ERISA defines various Fiduciary roles including the 402(a) named fiduciary, 3(16) plan administrator, a 403(a) trustee and more.

When it comes to ERISA, there are three guiding principles. The first is the exclusive benefit rule. It states that fiduciaries must act solely in the interest of the participants and beneficiaries. Many decisions made that one may think is a fiduciary decision is not actually a fiduciary decision such as the choice to establish a plan. Next the prudent expert rule requires a fiduciary to make decisions with skill and diligence. If a sponsor is not confident in their abilities, then they need to find someone with the proper expertise. It is worth noting that when you delegate fiduciary duties, you do not abdicate your fiduciary responsibilities. All companies in a pooled employer plan have fiduciary responsibility. When it comes to plan fees the court has made it clear that plan sponsors need to focus on ensuring they are reasonable. The final guiding principle is investment diversification. Companies need to provide a minimum of three different investment options and on average seven are provided.

When it comes to best practices, it's worth noting that while these are not required by ERISA, they are still very helpful. One of these practices include having what Jonathan refers to as policy statement hygiene. This includes keeping documents updated and being thoughtful in language choice. Another best practice is participant communication. Beyond required written notices additional participant engagement and education can go a long way to improving outcomes. Another practice mentioned is forming a committee and a committee charter. Training all your committee members/all plan sponsors on their roles and responsibilities is the best way to ensure that all these best practices as well as requirements are followed.