C. Fiduciary liability issues
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:
- Investment managers
- Plan administrator
The following generally are not plan fiduciaries when acting solely in their professional capacities:
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.
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
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