Offering a retirement plan is an effective way for employers to attract top talent.
According to a recent Glassdoor survey, over half of all job candidates report benefit offerings among their top considerations, and over 90% of younger workers say they would prefer increases in benefits rather than pay. As employers begin offering or expand retirement plans, it is vital they are aware of the requirements and potential liabilities that arise from adopting and administering the plan.
One area where liability can arise is when an employer or individual becomes a “fiduciary” to the plan. An individual or entity may become a fiduciary by being specifically named in the plan, for example, the Plan Administrator or Plan Trustee. Other times, someone is a fiduciary based on the actions they take, such as choosing an investment advisor, answering participant questions, dealing with plan assets, or interpreting the plan document. Put simply, anyone who exercises discretion over the administration or operation of the plan may be considered a fiduciary.
Any time a plan fiduciary acts they must comply with their “fiduciary duties,” which include:
- acting in the sole interest and to the benefit of participants and beneficiaries;
- acting with care, skill, and diligence; and
- adhering to the written plan documents.
Andrew J. Byler, Esq.
It is important that anyone performing fiduciary functions receive proper training, understand their obligations, and understand the plan terms.
A fiduciary who does not meet their responsibility may be personally liable for plan losses. If you are ever unsure whether you or your company is acting as a plan fiduciary or complying with fiduciary obligations you should consult with your benefits counsel.
Andrew J. Byler is an attorney with the law firm of Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.