All ERISA-covered plans are required to have a Plan Administrator and a Named Fiduciary.  The employer usually designates a benefits committee to serve this function.  If the employer does not appoint a Plan Administrator, then the employer shall retain full liability over the retirement plan.

A fiduciary is someone legally obligated to act solely on behalf of the person(s) he or she represents.

Under ERISA, there are two types of fiduciaries:

• Named Fiduciary: Each plan document is required to list at least one person who is responsible for the plan. In many cases, it is the Board of Directors.
• Functional Fiduciary: ERISA stresses the importance of function over title. ERISA 3(21)(A) provides that the following people are a fiduciaries:
  • Anyone with discretionary authority over plan assets
  • Anyone who exercises control over plan assets
  • Anyone who gives investment advice for compensation

• Settlor Function Committee (administrative) – Plan design is normally established at the corporate level and is not a fiduciary function. However, the Settlor Committee may be involved in making Plan design decisions. In those actions, the Committee is not acting in a fiduciary capacity.
  • Establishment of a plan
  • Determination of covered employees
  • Determining a match amount
  • Setting a vesting schedule
  • Amending a plan (non-required amendments)
  • Terminating a plan
• Fiduciary Function Committee (investment) – Fiduciary functions require the Committee to exercise the care of a prudent person who is familiar with Plan issues in the best interest of the participants.
  • Selection of Investment Manager(s)
  • Selection of Service Provider(s)
  • Filing Form 5500
  • Utilizing Plan Assets
  • Amending a plan (required amendments)

BFSG’s fiduciary education services include:

• Regular fiduciary training and best practices in fiduciary governance
• Legislative and regulatory updates
• Committee member onboarding sessions
• A 30-minute fiduciary training video, which may be viewed here.

ERISA 404(a)(1) places the following standards on fiduciary:

Duty of Loyalty: Duties shall be discharged with respect to a plan solely in the interest of participants and beneficiaries.

Exclusive Benefit Rule: Duties shall be discharged with the exclusive purpose of providing benefits to paricipants and their beneficiaries and defray reasonable expenses of administering the plan.

Duty of Care “Prudent Expert Rule”: Duties shall be discharged 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 in the conduct of an enterprise of a like character and with like aims.”

Duty to Diversify: Plan assets shall be diversified to minimize the risk of loss.

Duty of Obedience: The Plan shall be administered in accordance with the Plan Document.