ERISA Tips: ERISA Fiduciary Responsibility Generally Can’t Be Outsourced

For the very most part, you can’t offload or outsource your ERISA fiduciary responsibility.

 

ERISA has a couple of very specific exceptions through which you can limit—but not eliminate—your fiduciary obligations. One has to do with the specific decisions made by a qualified investment manager—and, even then, you remain responsible for the prudent selection and monitoring of that investment manager’s activities on behalf of the plan.

 

The second exception has to do with specific investment decisions made by properly informed and empowered individual participants in accordance with ERISA Section 404(c). Here also, even if your plan meets the 404(c) criteria (and it is by no means certain it will), you remain responsible for the prudent selection and monitoring of the options on the investment menu (and, as the Tibble case reminds us, that obligation is ongoing).

 

Outside of these two exceptions, you’re essentially responsible for the quality of the investments of the plan—including those that participants make. Oh, and hiring a 3(16) fiduciary? You’re still on the hook as a fiduciary for selecting that provider.

 

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 NTSA Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the NTSA Advisor, at [email protected]