Developing a Fiduciary File Cabinet

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 committees should meet regularly with written agendas and written meeting minutes. When third-party providers are retained, sponsors should document the evaluation and selection process.  

Plan sponsors should maintain a complete set of all current documents: plan document, trust agreement, summary plan description (SPD), plan forms and service agreements, as well as all amendments to those documents. “Ensure that the plan gives broad and final interpretive authority to the internal fiduciaries,” Wolfe added.  

The plan should have written investment policies and procedures. Fees should be reviewed regularly, and this process should be documented.  

Wolfe shared key documentation that should be included in plan committee minutes: 

• Identify all persons in attendance; 
• Highlight very prominently the good process followed by the committee at the meeting; 
• Focus on decisions reached at the meeting; 
• Maintain more formality (i.e., resolution format) as to actual votes taken; 
• Incorporate reports from third-party advisers by reference and maintain as part of the minutes; 
• Maintain appropriate plan-by-plan separation within the minutes; and 
• Emphasize advice provided by third-party advisers and legal counsel for the committee. 

Wolfe said the committee should develop a general format for the minutes, and the minutes should be drafted as soon as practical after the meeting. He suggested obtaining approval of the minutes by all members who attended and using the minutes as a basis for summary reports to higher governing fiduciaries to the plan.