A person is a fiduciary under ERISA if they exercise discretionary control or authority over plan management or disposition of plan assets, provide investment advice for plan assets for a fee, or have discretionary authority or responsibility in plan administration. If you are one of the ERISA fiduciaries involved in plan administration, what exactly are your fiduciary duties? And how easy is it to breach your fiduciary duties and become personally liable for damages you cause?
There are a large number of different responsibilities for plan administrators to keep in mind to avoid violating their fiduciary duties to plan participants and beneficiaries. First, they have to keep the plan document in compliance with applicable law. They also must operate the plan in accordance with that plan document, including letting employees participate based on the age and eligibility requirements laid out in the plan document, allocating contributions to plan participants based on the terms in the plan document, paying out participant distributions while forfeiting any non-vested portion of their account, administering the plan’s loan program, and splitting plan participant accounts according to Qualified Domestic Relations Orders.
Plan administrators also have to meet ERISA participant disclosure and government reporting requirements while also completing any required plan testing and then remedying any issues found. Plan documents must also be maintained in accordance with ERISA document retention rules.
As you can see, the responsibilities of a plan administrator fiduciary are many. Even one slip up can result in a violation of your fiduciary duty to plan participants and that makes you as the fiduciary personally liable for those damages.
How can you as the fiduciary protect yourself from a possible breach? Fiduciary liability insurance!
Where the ERISA Fidelity Bond is set in place to protect the participants of the plan it, however, does not protect YOU as the fiduciary.
Colonial Surety Company is a Treasury Listed surety company providing ERISA fidelity bonds packaged with fiduciary liability insurance which includes cyber liability insurance at no extra cost. Colonial is one of the leading providers of ERISA related products, offering bonds approved by the Dept. of Labor. We make it easy to obtain your bond instantly as well as allowing you to purchase retroactive insurance for the years the plan was not previously covered.
Under ERISA, fiduciaries may be held personally liable for a breach of their responsibilities in the administration or handling of employee benefit plans. Under ERISA 410, the plan cannot relieve you of this responsibility with indemnification language, however, it specifically permits persons with personal liability to purchase fiduciary liability insurance. Covering yourself with fiduciary liability insurance gives you a piece of mind that you are protected. Learn how to bundle your ERISA bond and fiduciary liability insurance for a discounted rate.
If you would like to learn more about purchasing an ERISA fidelity bond, or an ERISA fidelity bond package including fiduciary liability insurance and a cyber liability insurance endorsement, call 877.650.9661 or email ERISADept@colonialsurety.com. Learn more about becoming a Pension Professional Partner here.