The old adage that “no good deed goes unpunished” is a bit cynical, but it does serve to remind us that just because you are doing something noble, you are not automatically protected from claims related to your service.
This article will address whether you are an “appointing fiduciary”, and if you are, what you may wish to do to protect yourself and to achieve better results for the plan’s participants. The Department of Labor, in an Interpretive Bulletin on this topic, said:
“At reasonable intervals the performance of trustees and other fiduciaries should be reviewed by the appointing fiduciary in such manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards, and satisfies the needs of the plan. No single procedure will be appropriate in all cases; the procedure adopted may vary in accordance with the nature of the plan and other facts and circumstances relevant to the choice of the procedure”. (29 C.F.R. § 2509.75-8, FR 17)
Does every Board Member have fiduciary responsibilities? No. Two categories of Board Members may be personally off the hook:
- If your organization’s retirement plan is not subject to ERISA, then you don’t have a legal obligation to meet a fiduciary standard.
- Even if your organization’s retirement plan is subject to ERISA, you may not have personal fiduciary responsibilities if you are not part of the responsibility chain.
More on both of these later.
Disclaimer: This article is intended as a “heads-up” that important fiduciary issues exist for some Board Members. It is not intended as legal advice, which we are not qualified to provide. There are some terrific ERISA attorneys who can give you advice about your organization-specific fiduciary obligations. If you need a couple of names, please feel free to contact us.
Also, this article is focused on 403(b) plans, but the same general principles apply to any other qualified retirement plans your organization sponsors, such as Defined Benefit, 401(k), and Profit Sharing.