Developing a Fiduciary File Cabinet

February 14, 2013 ( – In the event of a plan audit or litigation, a retirement plan sponsor’s fiduciary process is only as good as it can demonstrate, said David Wolfe, partner with Drinker Biddle & Reath.

By Rebecca Moore | February 14, 2013
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During a webcast, “Fiduciary Issues for Tax-Exempt Benefit Plan Sponsors,” sponsored by Crowe Horwath LLP, Wolfe shared best practices for creating and maintaining a fiduciary file cabinet. He noted that these are best practices for both Employee Retirement Income Security Act (ERISA)-governed and non-ERISA-governed plans.  

An appropriate ERISA bond should be in place for fiduciaries before they begin to act. The bond should be updated periodically to make sure coverage is appropriate as the plan grows, Wolfe noted.  

The fiduciary file cabinet must include documentation of systematic processes, as well as evidence that good processes were followed. According to Wolfe, a critical starting point is identifying parties in plan operation and management, what they are responsible for and whether they are a fiduciary or not. For plan committees, a committee charter is needed to identify who is on the committee, when it meets, what processes it is responsible for and how it implements these processes. In addition, for third parties heavily involved in plan administration, plan sponsors must have a definitive agreement to establish roles and liability.  

Plan sponsors should pay special attention to fiduciary training. “It is on agencies’ radar right now, they ask when fiduciary education is provided and what it entails,” Wolfe said.