Retirement Plan Fiduciary Liability

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Legal Overview: Employee Benefit Plan Fiduciaries

When an employer chooses to establish an employee benefits plan, the resulting arrangement is regulated by the Employment Retirement Income Security Act (ERISA). An employer is the plan’s sponsor and employees become plan participants.

In this context, a fiduciary is a person or an entity that does any of the following:

Many parties may in effect act as benefit plan fiduciaries. These parties may include an internal administrative committee at work, an employer’s human resources department, a company’s board of directors, and parties who monitor other fiduciaries

The following parties are not usually considered fiduciaries of a retirement plan: attorneys, accountants, and actuaries.

What Are the Responsibilities of a Fiduciary?

Fiduciaries act on behalf of employees participating in the retirement plan. They have the following special responsibilities:

What Happens If a Fiduciary Fails to Carry Out Its Responsibilities?

A fiduciary that fails to carry out one or several of its duties may face serious consequences. For example, the fiduciary may be held personally liable for the misconduct and may be required to restore any losses sustained by the benefit plan. The fiduciary may also be sued by the participating employees.

Is It Possible for a Fiduciary to Limit Its Liability?

Faced with potential liabilities, fiduciaries may try to limit them to some extent by:

When to Seek Legal Help

If you believe that your employer or other fiduciary of your retirement plan has not acted in your best interest, you may need to consult with an experienced employment attorney. Remember that a range of individual can be liable for violations of ERISA, fiduciary duties, and other laws.

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Last Modified: 12-02-2013 12:29 PM PST

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