(b)lines Ask the Experts – Will the DOL’s New Proposal Make Me a Fiduciary?

“As an employee benefits manager for a large nonprofit hospital, I work with our plan consultants to put together investment recommendations for our Employee Retirement Income Security Act (ERISA) 403(b) plan to the plan’s fiduciary committee.

“I am not a named fiduciary for the plan (the named fiduciary is the committee) and I am not a member of that committee. I do not make any decisions regarding plan investments (or any other decisions regarding the plan, for that matter), and it is not the intent of my employer that I serve as a fiduciary. However, I have read that the Department of Labor (DOL) is tinkering with a more expansive definition of fiduciary, so I am concerned about my fiduciary status. Can the Experts shed any light on my situation?” 

Michael A. Webb, vice president, Cammack Retirement Group, answers:

Your question is quite timely, since the DOL recently issued a proposed rule that would modify the definition of fiduciary. The definition is much more expansive, and would include many individuals who are currently not fiduciaries, due to the fact that those individuals or entities make investment “recommendations.” At first glance, this definition would appear to apply to your present duties related to retirement plan investments, rendering you a plan fiduciary.

However, the Experts have some good news for you! There is a specific exemption from the new proposed definition of fiduciary for employees who provide statements or recommendations to a plan fiduciary of an ERISA plan, if such employee receives no fee beyond his or her normal compensation.

Proposed rules are, however, just that, and this proposed rule in particular is quite controversial. Thus, you should stay tuned for further developments in this regard, though it appears quite promising that you will not be treated as a fiduciary under the new proposed definition. In addition, benefits counsel with specific expertise in such matters should always be consulted if there is any doubt as to whether an individual is a plan fiduciary.


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.