Hey Joel! – Answers from a recovering former practicing ERISA attorney
Welcome to Hey Joel! This forum answers plan sponsor questions from all over the country by our in-house former practicing ERISA attorney.
The DOL has provided various commentaries on the topic of fiduciary education. The most recent manifestation of this is that DOL auditors have been directed to ask plan sponsors to evidence the fiduciary training they have received over the past 12 months. If none, this is a potential audit flag.
From the most elementary standpoint, the DOL believes that if fiduciaries do not receive training on their roles and responsibilities, they cannot be in position to practice their duties prudently. The DOL believes that the uninformed fiduciary may act with good intentions, but they “don’t know what they don’t know.” This is particularly concerning when it comes to issues of investment management and determination of plan fee reasonableness, but it really impacts all aspects of fiduciary activities which require practicing “procedural prudence” for all decisions.
If a plan sponsor or committee question this, I would show them our Fiduciary Fitness Program’s diagnostic report identifies the major fiduciary duties and education/documentation modules evidence fiduciary knowledge and prudent practices. If you are not fully confident with you responsibilities in each of the areas listed, you should obtain training.
A Committee charter allows for the plan sponsor and board of directors (the “named fiduciary” in their plan document) to delegate specified fiduciary responsibilities to a committee, or other co-fiduciaries. In the absence of the charter document, the named fiduciary retains all the day-to-day management responsibilities and liabilities, most of which can be delegated except the selection and monitoring of the co-fiduciaries so delegated. Most plan documents indicate that the “named fiduciary” is “the Company”, which is interpreted under ERISA law to be the BoD for a “c” corp, or the primary decision-making entity for other structures (e.g. managing partners if LLC, etc.).
As a former practicing ERISA attorney Joel works to ensure that plan sponsors stay fully informed on all legislative and regulatory matters. Joel earned his Bachelor of Arts from Tufts University and his Juris Doctor from Washington College of Law at the American University.
*If you have a question for Joel, please send it to your plan advisor. Maybe it will be featured in a future issue!