Check the list. Are you a fiduciary?

By Deborah A. Keary Jan 16, 2004

Q: What are the duties of a retirement plan fiduciary?

A: A fiduciary is a person who has some authority or control over the management of a retirement plan or its assets. This could be a small-business owner, officers of a company or plan trustees and could include the HR professionals in companies that offer retirement benefits. Anyone who helps to make decisions about how a retirement plan is managed, how its assets are invested, or helps to select a plan provider or funds is probably a fiduciary.

The Employee Retirement Income Security Act of 1974 (ERISA) mandates the duties and responsibilities of a plan fiduciary. ERISA focuses on five major duties for a plan fiduciary: first, act in the best interests of plan participants and beneficiaries; second, understand and be aware of all expenses paid from the plan; third, make prudent decisions regarding the plan, including investments and service providers; fourth, act in accordance with plan documents; and fifth, monitor the plan’s investments.

The Small Business Administration (SBA) has developed a checklist for fiduciaries to measure how well they are handling their duties, and reading it might help clarify what those duties entail. Some of the checklist items are these:

  • Do you fully understand your plan document and design?

  • Do your plan fiduciaries meet regularly and keep notes from these meetings?

  • Does your plan have a written investment policy statement?

  • Does your plan offer diversified investments?

  • Have you reviewed the investments available in your plan in the last 12 months?

  • Do you understand the investment costs within your plan?

  • Do you understand the services provided and the costs charged by the people and/or companies that help you to administer your plan?

  • Does your plan provide employee enrollment programs that explain the importance of participation?

  • Does your plan provide asset allocation funds or models for employees who lack investment knowledge?

  • Do you understand the requirements of ERISA?

Failure to comply with ERISA and act responsibly as a plan fiduciary can have serious repercussions, including heavy fines and possibly even jail. According to the SBA, proper fiduciary oversight takes only about an hour a month, and it is time well worth investing. For more information, or to read the SBA report, “Retirement Plan Management for Small Businesses,” click on

Deborah A. Keary, SPHR, is director of SHRM’s Information Center and Library.

Please Note: This material is provided as general information and is not a substitute for legal or other professional advice. National members may reach the HR Knowledge Center by calling (800) 283-7476 and choosing option #5 or by using the HR Knowledge Center Request Form found under HR Answers on SHRM Online.

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