#10
Critical Risk
Not Understanding your Role as Fiduciary
Plan sponsors are fiduciaries under ERISA and must act solely in participants’ interests with prudent care.
- Potential Consequences
- Personal liability
- Breach of fiduciary duty
- Participant lawsuits
- ERISA violations
- Prevention Tips
- Understand fiduciary responsibilities under ERISA
- Document all fiduciary decisions and processes
- Act solely in participants' best interests
- Ensure investment diversification
- Monitor and control plan fees
Need Expert Guidance?
Don’t let this mistake jeopardize your plan. Get professional help from experienced fiduciary advisors.
Many of the actions involved in operating a 401(k) plan make the person performing them a fiduciary. Generally speaking, most plan sponsors have taken on the role of fiduciary and thus are required to adhere to ERISA rules.
- Must act solely in the interests of plan participants.
- Must carry out all duties prudently.
- Must follow the plan document to the letter.
- Must insure that plan investments are diversified.
- Must pay only reasonable fees
It is important that you have a knowledgeable and helpful 401(k) administrator. Many of the pitfalls that befall a 401(k) plan and Plan Sponsor can be prevented by proper planning and documentation. Don’t be left holding the bag!
"The buck stops here!"
— Harry S. Truman
