In our last post, we spoke about the importance of businesses being aware of their fiduciary responsibilities and establishing solid compliance policies to ensure they are meeting their legal obligations. One area where this is particularly important for companies sponsoring retirement plans under ERISA, the Employee Retirement Income Security Act of 1974. Because these plans constitute an important source of support for many Americans after they leave full-time work, companies who sponsor these plans have a large responsibility.
One of the resources available to retirement plan sponsors through the Department of Labor is Compliance Assistance. Businesses are able to work with the resources provided by the Department of Labor in coming up with their own compliance policies for retirement plans, and in some cases may even be able to receive specific guidance in how to manage fiduciary duties.
A recent example of such guidance was released earlier this month in connection with the question of when exactly a sponsor’s fiduciary duty to monitor an insurer’s solvency ends. According to the bulletin published by the DOL, that duty generally ends when the retirement plan stops offering an annuity as a distribution option. The guidance was issued in part to clarify an annuity selection safe harbor rule finalized back in 2008 which lacked clarity on the issue.
As can be imagined, compliance assistance regarding fiduciary duties is often necessary for businesses in setting up their business policies, since the exact application of these duties is not always evident. While it is possible for companies to obtain the guidance they need by working with resources provided by the appropriate government agencies and other available resources, it is best to work with an experienced attorney who can ensure accuracy of understanding of the law and zealous advocacy when problems arise.