As a retirement plan sponsor, you know you have a fiduciary responsibility to ensure that the plan functions in the best interest of participants, but what exactly does that mean? Here’s a quick refresher.
If you find yourself fuzzy on fiduciary responsibilities, you are not alone. As retirement industry executives observe: few plan sponsors really understand their fiduciary duties and responsibilities, but because of a number of factors including the recent class action lawsuits and a new focus by the Department of Labor and Internal Revenue Service on a number of issues including fees, plan sponsors need to be more vigilant.
When you need a refresher, it’s a good idea to start by reviewing the Department of Labor’s summation of fiduciary responsibilities and the related protocols for choosing a service provider, assessing the fees and monitoring the services. Recently, 401k Help Center published an expert’s overview of fiduciary duties—though not comprehensive, the list offers plan sponsors a helpful snapshot:
- A fiduciary must act solely in the best interests and for the exclusive benefit of plan participants and beneficiaries.
- Must defray plan expenses in a reasonable manner. This implies that a fiduciary knows what all the plan expenses and costs are.
- Must comply with all plan documents and all applicable federal and state laws and regulations. This implies that fiduciaries will become familiar with them.
- Where a fiduciary is unsure of their expertise, they have a duty to seek the advice of experts and carefully evaluate the advice given.
- A fiduciary may not engage in certain transactions with parties providing services to the plan such as the sale or leasing of property, lending of money, furnishing goods, services or facilities, or the transfer or use of plan assets.
- Self-dealing is prohibited and therefore a fiduciary cannot use their position for personal gain.
- A fiduciary may not act on behalf of any party whose interests are adverse to the interests of the plan or the plan participants.
- A fiduciary must act with the care, skill and diligence that would be exercised by a reasonably prudent person who is familiar with such matters.
- Fiduciaries have an affirmative duty to diversify plan investment options.
- A fiduciary has an obligation to prudently select investment options for the plan, as well as an obligation to periodically evaluate the performance of such vehicles to determine, based on that evaluation, whether the vehicles should continue to be available as participant investment options.
Keep in mind, that no matter how diligently you strive to fulfill your responsibilities, there’s no guarantee that as a plan sponsor you won’t face personal exposure for breach of fiduciary duty. Given the rise of ERISA lawsuits targeting small businesses, why take chances? At Colonial Surety, you can affordably obtain fiduciary liability insurance and get peace of mind that your personal assets are protected from a breach of responsibility in the administration or handling of the employee retirement plan. With an annual premium that is less than what you would pay for just one hour with an expert ERISA lawyer if disaster strikes, Colonial can quickly help you obtain fiduciary liability insurance now: Fiduciary Liability for Plan Sponsors Here.
While you are brushing up on your responsibilities as a plan sponsor, don’t forget cybersecurity! It’s a good idea to review the Employment Benefits Security Administration’s recently released guidance in three parts for mitigating the threat of cyber crime against retirement accounts: Tips for Hiring a Service Provider; Cybersecurity Program Best Practices; and, Online Security Tips.
Experts advise small business owners not to underestimate digital security risks— the results are costly—and frequently devestating. Having a response plan is critical—and Colonial Surety can help. Our affordable Cyber Liability insurance provides a dedicated team of experts who assist at every stage of incident investigation and response in the event of a breach. Carefully vetted forensic and legal experts establish what’s been compromised, assess responsibility and notify impacted individuals. As needed, call center support, credit and identity monitoring is provided— even public relations experts. Liability protection in the event of covered lawsuits or regulatory actions due to a data breach? Of course, that’s included too.
Plan sponsors across the country are saving time and money with Colonial Surety’s reasonable and comprehensive packages for plan sponsors, which include:
- The ERISA bond required to protect the assets of the retirement plan from theft;
- Fiduciary Liabilitycoverage to protect you and your assets from personal liability; and,
- Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Colonial makes it so easy to secure all this coverage that you can do it now, right here: Complete Plan Sponsor Package Here.
Colonial Surety Company is in business all across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.
Serving customers since 1930, Colonial Surety is 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.