Oversight: Participant Data



Claims of fiduciary breaches over the fees and performance of investment options in retirement plans continue—with most litigation ending in hefty settlements and paving the way for more cases, impacting more plans and businesses. Lawyers advise plan sponsors to make sure their plans have a clearly articulated investment policy.


Investment Policies

Ensuring that investment options are benefiting participants, and that the associated fees are reasonable, are critical fiduciary responsibilities: solid administrative policies and procedures detailing how investments are chosen and monitored need to be in place. Foley & Lardner offer this guidance:


In the past several years, there has been an explosion of ERISA class actions claiming breaches of fiduciary duties related to fees associated with, and underperformance of, investment alternatives in 401(k) plans. This highlights the need for a 401(k) plan’s investment committee to have clear procedures for selecting plan investment alternatives and monitoring those choices (including fees) to help avoid, or defend against, claims that the plan’s investment alternatives were improper. 


What’s typically included:

  • Criteria to consider when first selecting a fund
  • Criteria to consider when deciding to replace a fund
  • Procedures for identifying a qualified default investment alternative
  • Process for monitoring investment fund and investment service provider costs
  • Proxy voting policy


Keep in mind that as diligently as you go about your plan sponsor duties, including putting policies in place, you can mitigate fiduciary liability risks—but never fully eliminate them. Under ERISA law, any individual involved in the management of a retirement plan can be held personally liable. Let Colonial Surety help you manage the inherent risks with our affordable three point protection plan: the DOL required ERISA bond to protect the assets of the retirement plan from theft; Fiduciary Liability Insurance to protect you and your assets from personal liability; and, Cyber Liability Insurance to safeguard your company and plan from covered losses and expenses in the event of a cyber breach. With Colonial, you can easily and quickly secure your affordable coverage package right now:


Protection for Plan Sponsors Here..


Strong Administrative Policies

Experts at Foley & Lardner LLP remind us of the importance of having comprehensive and  and up to date administrative policies in place for the company sponsored 401(k) plan. Some policies are required under ERISA or via specific Department of Labor guidance. Although not every recommended policy is technically “required” by law, having strong policies—and documentation of how they’ve been implemented—can come in handy in the event of government audits and litigation brought by participants. Lawyers also point out: “Having clear policies and procedures in place also helps employees involved in plan administration do their job more efficiently by mapping out appropriate steps to take when various situations arise.” In addition to an investment policy, it is advisable for 401(k) plans to also have these policies and procedures:


  • Loan Policy
  • QDRO Procedures
  • Cybersecurity Policy and Procedures
  • Missing Participant and Uncashed Check Procedures


Keep in mind that the cybersecurity guidance from the DOL specifically includes Tips for Hiring a Service Provider. Plan sponsors need to follow this guidance—and of course document the steps taken accordingly. Similarly, plan sponsors need to apply the DOL’s Cybersecurity Program Best Practices and Online Security Tips in their own businesses, as well as ensure that all contracted providers do so. Not sure where to begin? Let us help. Colonial Surety makes it efficient and affordable for plan sponsors to take action on cybersecurity—and protect themselves too. Because cybersecurity issues can rapidly result in allegations against fiduciaries, we offer a value-added Cyber-Fiduciary Liability coverage pack. Obtain it today and in the event of a cyber breach, you’ll have expert-led breach response support, including:


  • Legal services.
  • Computer forensic services.
  • Public relations and crisis management expenses.
  • Notification services.
  • Call Center services.
  • Credit and Identity monitoring
  • Protection from lawsuits and regulatory actions related to the breach.


Colonial’s Cyber-Fiduciary Pack, also covers defense costs and penalty limits up to $1,000,000, if faced with claims of alleged or actual  fiduciary breaches of duty in connection with the employee retirement plan.  At Colonial, we make it so efficient and reasonable for plan sponsors to secure insurance, that you can do it in minutes, now:


Cyber and Fiduciary Liability Insurance Here.


Colonial Surety Company is rated A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.