Are you a plan fiduciary?
Whether you are a fiduciary is determined by what you do, and not necessarily who you are. Anyone who has decision-making control over managing a plan — its assets or its administration is considered a fiduciary. Anyone who provides investment advice to the plan for a fee is also a fiduciary.
You might think that if you are not mentioned by name in plan documents that you can escape the fiduciary label and its related responsibilities. This is not true! For example, if there is a committee choosing the plan’s investments or ratifying an advisor’s recommendations, each person on that committee has fiduciary responsibility.
Most plans have several fiduciaries, some of whom may be “named” and some of whom just have decision-making control over some aspect of the plan. Fiduciaries usually include the plan’s trustee, investment advisor, administrative committee, and anyone who selects these individuals. A plan sponsor is always a fiduciary.
Accountants, actuaries, third party administrators (TPAs), and attorneys typically are not fiduciaries, because they lack any discretionary control over the plan. Everyone working with the plan must know whether or not they are a fiduciary. And if they are, they need to be prepared to meet the expectations of their role, or to recruit someone who can help them meet their responsibilities.
If you alone, or as a member of a group or committee, are selecting and monitoring the plan’s investments or approving a provider’s recommendations, you are a fiduciary!
Why does this matter?
A recent report issued by the Center for Retirement Research at Boston College states that lawsuits against 401(k) plan sponsors have been steadily rising over the last several years due to fiduciaries not properly performing their duties. Additionally, 75% of sponsors surveyed in a 2018 IGNITES report said they made some type of change to their plan last year.