Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at [email protected].
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The following information is derived from “Those Pesky Plan Documents…What Do They Have To Do With my Fiduciary Duties?,” an article by Deborah Fabricant that appeared in Boutwell Fay LLP’s Benefits News blog.
A fiduciary’s duty regarding plan documents is a “sleeper” duty, says Fabricant, that “could catch even the most seemingly prudent and loyal fiduciary by surprise.” And that, she warns, entails the risk of the being exposed to “potential legal and/or regulatory action.”
Fabricant calls notes that ERISA Section 404(a)(1) requires that a fiduciary act solely in the interest of plan participants and beneficiaries:
1. For the exclusive purpose of providing benefits to participants and their beneficiaries.
2. With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use.
3. By diversifying the plan.
4. In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of ERISA III.
The plan document duty, Fabricant argues, boils down to two duties:
1. A duty to know and follow the terms of the governing plan documents.
2. A duty to review the governing plan documents to determine if they are consistent with ERISA.
If the plan document is not consistent with ERISA, she says, the plan fiduciary must consult with their counsel “and then take prudent steps in light of the inconsistency,” which includes alerting the plan sponsor.
[email protected]
The following information is derived from “Those Pesky Plan Documents…What Do They Have To Do With my Fiduciary Duties?,” an article by Deborah Fabricant that appeared in Boutwell Fay LLP’s Benefits News blog.
A fiduciary’s duty regarding plan documents is a “sleeper” duty, says Fabricant, that “could catch even the most seemingly prudent and loyal fiduciary by surprise.” And that, she warns, entails the risk of the being exposed to “potential legal and/or regulatory action.”
Fabricant calls notes that ERISA Section 404(a)(1) requires that a fiduciary act solely in the interest of plan participants and beneficiaries:
1. For the exclusive purpose of providing benefits to participants and their beneficiaries.
2. With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use.
3. By diversifying the plan.
4. In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of ERISA III.
The plan document duty, Fabricant argues, boils down to two duties:
1. A duty to know and follow the terms of the governing plan documents.
2. A duty to review the governing plan documents to determine if they are consistent with ERISA.
If the plan document is not consistent with ERISA, she says, the plan fiduciary must consult with their counsel “and then take prudent steps in light of the inconsistency,” which includes alerting the plan sponsor.
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