Retirement plans offer great benefits to both employees and business owners. However, retirement plans require a certain level of administration and management that are required by the Employee Retirement Income Security Act (ERISA).

Who is a Fiduciary?
Those who manage retirement plans and their assets are called fiduciaries. Your plan most likely has a team of fiduciaries that includes both outside administrators and trustees and individuals at your company that you have appointed. The key is that these people can exercise discretion over the plan.

What are fiduciaries responsibilities?

  • Act solely in the interest of the plan participants
  • Carry out their duties prudently
  • Follow the plan document
  • Diversify plan investments
  • Pay only reasonable plan expenses

Fiduciaries that do not follow the basic standards can be held personally responsible to restore any losses to the plan. You can’t entirely delegate fiduciary responsibility. You are still responsible for choosing service providers and monitoring their activity.

How can a plan fiduciary mitigate risk?

  • Prove that your decision making process is both prudent and deliberative. Document & follow a written investment policy.
  • Satisfy the requirements of Section 404(c). The basic requirements are: offering investment options with materially different risk and return characteristics, the ability for participants to transfer assets often and giving participants the opportunity to obtain enough information to make educated investment choices.
  • Understand all plan fees, not just recordkeeping or administrative fees. Be sure you understand investment fees and then document your review of plan fees for reasonableness.

Understanding fiduciary responsibilities can be confusing. Don’t let confusion create risk to you and your company. For more information, contact Julie Schroeder, Audit Manager, at