Over the last two years, retirement plan fiduciaries have faced increased scrutiny by regulators, congressional hearings and even Supreme Court rulings. Because plan fiduciaries bear personal liability under the law, many are taking measures to protect their personal assets from unnecessary risk.

Am I a Fiduciary?

Your actions rather than your title define you as a fiduciary. The Employee Retirement Income Security Act (ERISA) defines a fiduciary as anyone that exercises authority or control over the management of the plan or its investments. For most, this means owners and senior managers, especially those that select the 401(k) service provider, advisors or plan funds.

Even if you hire an outside fiduciary, plan sponsors almost always retain their fiduciary status. It is extremely difficult for any employer to claim that they had no influence whatsoever over anything to do with their 401(k) plan.

So I'm a Fiduciary...What Now?

There are fiduciary liability policies that can be bought, but the best legal defense is always to do things right. For fiduciaries, this means establishing some simple practices that show due diligence, and avoiding the violations that can get you in trouble. Examples of some of the fiduciary practices established by the American Institute of Certified Public Accountants and the Foundation for Fiduciary Studies are:

♦ Make sure your plan has a written Investment Policy Statement. Most do not.
♦ Establish objective, third party fund monitoring. Your funds don’t have to be the best
performing, but you do need to show you are keeping an eye on them.
♦ Conduct formal “Fiduciary Committee” meetings at least annually.
♦ Document fiduciary decisions in formal meeting minutes. Department of Labor auditors
are specifically asking for this.

For more information or assistance with taking your 401(k) plan to the next level, call Mike Montgomery of Rawls Employee Benefits at 813-868-1927, ext. 1924.

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