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Let’s Play Ball! It’s Time to Step Up to the Plate to Review Fiduciary Status and Fiduciary Duties
James Quaid

Are you a fiduciary for your company or organization’s retirement plan? If yes, you may find it challenging to “cover all the bases” in understanding your fiduciary duties. Some common duties that get overlooked include failing to identify the plan’s fiduciaries and insufficiently training fiduciaries on their responsibilities.

Who is on Team “Fiduciaries”?
Do you know all your plan fiduciaries? Having fiduciary status, and the liability associated with the role, is a powerful motivator to pay careful attention to the management of a retirement plan.

Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. Using discretion in administering and managing a plan or controlling the plan’s assets makes that person a fiduciary to the extent of that discretion or control. Thus, fiduciary status is based on the functions performed for the plan, not just a person’s title.

A plan must have at least one fiduciary (a person or entity) named in the written plan, or through a process described in the plan, as having control over the plan’s operation. The named fiduciary can be identified by office or by name. For some plans, it may be an administrative committee or a company’s board of directors.

A plan’s fiduciaries will ordinarily include the trustee, investment advisers, all individuals exercising discretion in the administration of the plan, all members of a plan’s administrative committee (if it has such a committee) and those who select committee members. The key in determining whether an individual or an entity is a fiduciary is whether they are exercising discretion or control over the plan.

Spring Training
Given the crucial role fiduciaries play, they must be properly trained for the role. This is a step that is often neglected and can be of particular concern for company employees whose full-time jobs are not related to running the plan.

Failing to properly train fiduciaries to carry out their roles may represent a fiduciary breach on the part of the other fiduciaries responsible for selecting them. The U.S. Department of Labor is known to focus on this when it reviews a plan’s operations. It is also recommended that named fiduciaries accept their role as a fiduciary in writing.

A Good Catcher and Proper Insurance
A good catcher provides necessary support for a team’s pitcher. Similarly, an important task for an employee benefit plan includes properly protecting your plan’s fiduciaries against costly litigation and penalties with insurance designed for this purpose. Companies generally cover fiduciaries who also serve as corporate directors or officers through directors and officers or employment practices insurance policies. However, these policies generally do not extend to fiduciary breaches.

It is important to remember that ERISA fidelity bonds protect a plan’s assets from theft or fraud, not from fiduciary breaches. ERISA requires a fidelity bond, but not fiduciary liability insurance. However, given that anyone who is a fiduciary is personally liable for any violation of their fiduciary duties, a plan should have fiduciary liability coverage, often called an ERISA rider.

Preparing for Victory
Ultimately, retirement plans should prepare employees for retirement. How well that is accomplished is often referred to as participant “outcomes.” It is important to recognize fiduciary duties and responsibilities. A consistent review of the duties and responsibilities will help you and your team of fiduciaries focus on the big game in helping to guide the plan to best assist participants to prepare for retirement.

For more information, contact Jim Quaid at [email protected] or Larry Ruff at [email protected], or call them at 312.670.7444. Visit to learn more about our Employee Benefit Plans Services.

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