|Illustration by Red Nose Studio|
One of the most popular (and now regular) sessions at the PLANSPONSOR National Conference is one we introduced several years back titled “10 Things You’re (Probably) Doing Wrong as an ERISA Fiduciary.” Not because those at the conference were lax or slipshod in their endeavors—quite the contrary. Those who seek to know what they might be doing wrong are not generally the ones that need the “help.” However, because the standards imposed on plan fiduciaries by the Employee Retirement Income Security Act (ERISA) are—rightfully—demanding, the potential to misstep without meaning to is ever-present.
In putting together the list that follows, I have drawn on a familiar yet different source: the Employee Benefits attorneys that participated in our annual Employee Benefits Attorneys Guide (see PLANSPONSOR, August 2011).
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 knowing who the plan fiduciaries are.
“We often see confusion and lack of clarity about who the fiduciaries actually are and what their obligations are under the plan,” notes Monica Calhoun, Managing Partner at Centennial, Colorado-based Giller & Calhoun LLC. That’s right, a big problem for ERISA fiduciaries is that sometimes they do not even know if they are one—or who else shares that status for the plan (odds are, if you are reading this, you are one).
“It is very important to identify who the fiduciaries are and to document their actions in carrying out their duties. Everyone associated with the plan should be cognizant of whether their responsibilities create fiduciary obligations. Conversely, it is important to draft the plan carefully to designate specifically those that are responsible for fiduciary obligations.”
Moreover, for those who are fiduciaries, Paul Holmes, Chair of the Benefits Group at Ungaretti & Harris LLP, cites the failure to obtain professional assistance in obtaining and negotiating for proper fiduciary insurance coverage, as well as the failure by employees who serve as plan fiduciaries to investigate, understand, and request adequate employer indemnification. After all, if you are a plan fiduciary, your liability is personal, and it can extend to the actions of other plan fiduciaries. You may be required to restore any losses to the plan or to restore any profits gained through improper use of plan assets. You can obtain insurance to protect against that personal liability—but that is probably not the fiduciary liability insurance you may already have in place, or the fidelity bond that often is carried to protect the plan against loss resulting from fraudulent or dishonest acts of those covered by the bond. If you are not sure what you have, find out—now.