Defined Contribution
During our discussions with clients, concerns are expressed by individuals responsible for the administration and governance of their company’s retirement plans. Retirement plan fiduciaries have been increasingly subject to litigation by plan participants, and are concerned about how to manage their risk.
COMMON PLAN FIDUCIARY
MISTAKES
AND BEST PRACTICES Lawrence R. Peters, CPA, EA
Common Fiduciary Mistakes A good place to start is to identify the most common ERISA Fiduciary mistakes, and then adopt best practices to reduce the possibility of committing these mistakes. The mistakes that can potentially lead to the most significant problems are: 1. Failing to identify who your Plan Fiduciaries are. Fiduciaries may be named in the plan document, but also may become fiduciaries by virtue of their functions or actions. If an individual exercises discretionary authority or responsibility for the administration of the plan, or exercises any authority or control over the plan or disposition of the plan’s assets, they could be a fiduciary. 2. Individuals may not understand when they are acting in a fiduciary capacity. Many individuals who are members of a retirement committee perform both fiduciary and settler functions. Fiduciary duties include plan administration, implementation of amendments or termination of the plan, holding or investing plan assets, appointing a fiduciary, and communication with participants.
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