A couple of disclaimers up front: First, if you're
taking the time to read this, odds are you probably are
doing a better-than-average job as a plan fiduciary.
Second, you may well be able to identify things that are
not on this list. This is a list compiled based on three
decades of experience working with retirement plans;
numerous conversations with providers, plan sponsors,
regulators, and advisers; as well as a review of documented
compliance shortfalls. Note, however, that there is
frequently a difference between doing all that the law
requires and doing everything that you can do.
This listing is a combination of the things that you
must do, and things that you do not have to do—but that, if
done, would keep you and your plan(s) in good stead. I hope
you find this list informative—and that you draw insight
and comfort from its contents, as well as a reminder of the
awesome responsibilities you have as a plan fiduciary.
1. Not having a plan/plan Âinvestment
ERISA only requires that the named fiduciary (and there
must be one of those) make decisions regarding the plan
that are in the best interests of plan participants and
beneficiaries, and that are the types of decisions that a
prudent expert would make about such matters. ERISA does
not require that you make those decisions by yourself—and,
in fact, requires that, if you lack the requisite
expertise, you enlist the support of those who have it.
You may well possess the requisite expertise to make
those decisions—and then again, you may not. However, even
if you do, why forgo the assistance of other
However, having a committee for the sake of having a
committee not only can hinder your decision(s), but also
can result in bad decisions. Make sure your committee
members add value to the process (hint: once they discover
that ERISA has a personal liability clause, casual
participants generally drop out quickly).
Having a committee and not having committee meetings is
potentially worse than not having a committee at all. In
the latter case, at least you ostensibly know who is
supposed to be making the decisions. However, if there is a
group charged with overseeing the activities of the plan
and that group does not convene, then one might well assume
that the plan is not being managed properly, or that the
plan's activities and providers are not managed and
monitored prudently, as the law requires.
3. Not keeping minutes of committee
There is an old ERISA adage that says "prudence is
process." However, an updated version of that adage
might be "prudence is process—but only if you can prove
it." To that end, a written record of the activities of
your plan committee(s) is an essential ingredient in
validating not only the results, but also the thought
process behind those deliberations.
More significantly, those minutes can provide committee
members—both past and future—with a sense of the
environment at the time decisions were made, the
alternatives presented, and the rationale offered for each,
as well as what those decisions were. They also can be an
invaluable tool in reassessing those decisions at the
appropriate time and making adjustments as
warranted—properly documented, of course.