Part 3: Fiduciary Responsibilities Under ERISA and the Internal Revenue Code

Managing Fiduciary Risk

Because of the wide range of fiduciary liabilities, employers should delegate responsibilities only to trusted and well-chosen trustees. They should also think about liability insurance for possible fiduciary duties. Although plans cannot absolve fiduciaries from responsibility, they can offer insurance and indemnify employers for their losses.

Ensuring Compliance With Fiduciary Duties

To comply with rules regarding fiduciaries:

• Selection And Monitoring: Choose carefully and keep an eye on all service providers as well as those who act in a fiduciary capacity.

• Education: Make sure that all parties acting as such understand what is expected of them in terms of adherence to policies.

• Documentation: Keep detailed records concerning decisions made by or actions taken by individuals acting in a fiduciary capacity.

• Insurance: Obtain suitable coverage against breaches involving potential violations committed by people holding positions requiring trustworthiness towards others’ interests above their own (i.e., “breach”).

Business owners can effectively manage employee benefit plans, protect retirement assets belonging to employees, and minimize risks – if they recognize these requirements related to being a trustee.