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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:
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 http://www.sba.gov/nationwide/index.htm.
Deborah A. Keary, SPHR, is director of SHRM’s Information Center and Library.
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