C. Fiduciary liability issues

Plan fiduciaries
Plan fiduciaries are individuals or groups of people who exercise their judgment or discretion to administer and manage a retirement plan or who have the power to control the plan's assets. Fiduciary status is based on the functions a person performs for the plan, not just the title.


Plan fiduciaries include:

  • Trustee
  • Investment managers
  • Plan administrator

The following generally are not plan fiduciaries when acting solely in their professional capacities:
  • Attorneys
  • Accountants
  • Actuaries

Responsibilities of plan fiduciaries
Fiduciaries are subject to certain standards of conduct because they act on the behalf of plan participants. These responsibilities include:
  • Acting solely in the interest of plan participants and their beneficiaries.
  • Carrying out their duties with skill, prudence and diligence.
  • Following the plan documents (unless inconsistent with ERISA),
  • Diversifying plan investments.
  • Paying only reasonable expenses of administering the plan and investing its assets.
  • Avoiding conflicts of interests.

Fiduciary liability
Fiduciaries who do not follow basic standards of conduct may be personally liable to restore any losses to a plan, or to restore any profits made through improper use of the plan's assets. Fiduciaries can limit their liability is by demonstrating they carried out their duties by documenting the processes used to carry out their responsibilities.
Prohibited Transactions and Reporting Requirements

Related Articles
  1. Financial Advisor

    Coverage of Fiduciary Liability Insurance

    As fiduciaries, retirement plan sponsors have tremendous personal liability exposure. Find out how fiduciary liability insurance can protect personal assets.
  2. Financial Advisor

    Meeting Your Fiduciary Responsibility

    Being a fiduciary comes with a certain level of responsibility. These four steps will reduce your liability when managing other people's money.
  3. Retirement

    What is a Fiduciary?

    A fiduciary is a person who acts on behalf of another person (or people) to manage assets.
  4. Financial Advisor

    Identifying a Breach of Fiduciary Duty

    Pension fund managers are not the only entities owing a fiduciary duty to stockholders. Corporate officers and directors have key fiduciary roles.
  5. Retirement

    What You Should Know About the New Fiduciary Rule

    These key questions and answers clarify the DOL's new fiduciary rule and how it impacts individual investors saving for retirement.
  6. Small Business

    Protecting Your Employees' Benefits as a Fiduciary

    Employers who provide benefits to their employees have a fiduciary duty to protect those benefits.
  7. Financial Advisor

    Why Fiduciary Rule is Good News for Small Plans

    Under the new fiduciary rule small business owners may be subject to less risk for the plans that they sponsor. Here's why.
  8. Personal Finance

    Blurred Lines: Whom Can You Trust for Financial Advice?

    The question of whether your financial advisor is truly a fiduciary isn't always clear. What to ask – and what to be careful about signing.
  9. Retirement

    Why Retirement Plan Sponsors Could Face Litigation

    A Supreme Court decision makes it easier for retirement plan participants to sue their employers. Apathy is not a strategy for plan sponsors.
  10. Personal Finance

    Protecting Your Investments With a Fiduciary

    Protect your investments from brokers with conflicting interests by hiring a fiduciary.
Frequently Asked Questions
  1. I'm about to retire. If I pay off my mortgage with after-tax money I have saved, I can save 6.5%. Should I do this?

    Only you and your financial advisor, family, accountant, etc. can answer the "should I?" question because there are many ...
  2. My wife and I both converted our Traditional IRAs to Roth IRAs over a decade ago and have invested the maximum allowed each year since. We're buying our first home soon. Do we both qualify for one-time, tax-free, $10,000 distributions?

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ...
  3. Is a Thrift Savings Plan (TSP) a qualified retirement plan?

    Take advantage of the government's retirement plan for employees with the Thrift Savings Plan. As with a 401(k), contributions ...
  4. Who manages the assets in a Roth 401(k) account?

    Learn how to personally manage the assets in your Roth 401(k) plan and determine the best options available to help meet ...
Trading Center