Articles

Identify All of Your Company’s Retirement Plan Fiduciaries

Identify All of Your Company’s Retirement Plan Fiduciaries

Your company probably offers its employees a retirement plan. If so, can you identify all of your plan fiduciaries? From a risk management perspective, it’s critical for business owners to know who has fiduciary status — and the associated liability. Here are some common, though in some cases overlooked, plan fiduciaries:

Named fiduciaries

The Employee Retirement Income Security Act (ERISA) requires a plan to have named fiduciaries. The plan document identifies the corporate entity or individual serving as the named fiduciary. If they aren’t immediately identified, the plan document will set the requirements for naming them.

 

Plan trustees

These are people who have exclusive authority and discretion to manage and control the plan assets. The trustee can be subject to the direction of a named fiduciary. These plan fiduciaries have a broad scope of responsibility.

 

Board of directors and committee members

The individuals who choose plan trustees and administrative committee members are considered under ERISA to be fiduciaries. Typically these are the members of the corporate board of directors. The scope of their fiduciary duty focuses on how they fulfill that specific function, and not on everything that happens with the plan itself. The law also sees as fiduciaries people who exercise discretion in key decisions about plan administration, including members of the administrative committee, if such a committee exists.

 

Investment managers and advisors

The named fiduciary can appoint one or more investment managers for the plan’s assets. People or firms who manage plan assets are plan fiduciaries. However, individuals employed by third party service providers can fall into different fiduciary categories. The investment manager who has complete discretion over plan asset investments has the greatest fiduciary responsibility. In contrast, a corporation or individual who offers investment advice, but doesn’t actually call the shots, has a lesser fiduciary responsibility.

 

These are just a few examples. Anyone who exercises discretionary authority over any vital facet of plan operations may be considered a “functional fiduciary.” Please contact our firm for a review of your retirement plan and its fiduciaries.

© 2017

All information herein has been prepared solely for informational purposes only and opinions are subject to change. Past performance is not indicative of future results and all investments involve the risk of loss of principle. For information on how these general principles apply to your situation, consult an investment professional.

Article Topic Expert: Sean Cote

With more than fifteen years of experience in retirement planning, investment consulting and futures trading, Sean specializes in helping businesses understand how qualified retirement plans work and what options will best meet their specific needs. In his prior role with WHA Financial Solutions, a subsidiary of the Wisconsin Hospital Association, he provided research and reports for investment committees of hospitals to assist in the selection and ongoing monitoring of investments for the retirement plans of those institutions.

Contact Us

Want to learn more about this topic or the services SVA Plumb Financial provides? Great, we'd be happy to answer any of your questions. Just fill out the form below and we'll get in contact.