Plan fiduciaries, regardless of their title, are expected to perform their duties solely in the best interests of plan participants and their beneficiaries. In addition, plan fiduciaries are expected to act prudently. Failing to do so, and failing to comply with Department of Labor (DOL) fiduciary responsibilities, can lead to a fiduciary liability lawsuit. What follows are actionable suggestions on avoiding fiduciary liability in 2019.
Hire and Monitor the Right People
Fiduciaries can’t know everything. Often, they must hire legal counsel, vendors, accountants, financial advisers, and appraisal experts to provide advice and assistance.
However, although fiduciaries may not be physically performing the work, they are (pursuant to ERISA’s fiduciary requirements) responsible for hiring qualified people who do so.
Plan fiduciaries are always expected to act prudently and in the best interests of the plan participants and their beneficiaries. This also applies to investments held by the plan.
Specifically, fiduciaries are expected to diversify the plan’s investments. It’s also critical to follow the terms of the plan if they are consistent with ERISA. In addition, plan fiduciaries must watch for and avoid conflicts of interests.
Fees may be paid for a number of legitimate plan-related expenses. However, fiduciaries are responsible for making sure that services are necessary and reasonable. Periodic review is advisable.
Follow Plan Terms Carefully
It’s vitally important for plan fiduciaries to understand and follow the terms of the plan. After all, the plan is the foundation for everything that follows. The plan should be updated as needed. For example, any changes to the plan or to the fiduciaries overseeing the plan should be addressed in the plan documents immediately, if possible.
Avoid Fiduciary Liability Claims
If you hope to avoid claims and lawsuits, this is the time to review your plans and protocols. Make sure you are fully compliant and that everyone, especially plan fiduciaries, understands their role.