If we don't have a fiduciary committee, who is the plan fiduciary?

If your organization does not have a fiduciary committee explicitly designated to oversee your ERISA-governed health or retirement plan, fiduciary responsibilities do not disappear—they are assumed by specific individuals or roles within the organization. Understanding who holds these responsibilities is essential to ensuring compliance with ERISA’s stringent requirements.

In the absence of a fiduciary committee, the following individuals or groups within your organization are typically considered fiduciaries:

1. Plan Sponsor: The plan sponsor, often the employer or the company offering the health or retirement plan, inherently holds fiduciary responsibilities. As the plan sponsor, the organization must act in the best interests of the plan participants and beneficiaries, ensuring that decisions are made with care and prudence [1].
2. Plan Administrator: The individual or entity responsible for the day-to-day administration and operation of the plan often assumes fiduciary duties. If your organization’s plan administrator makes discretionary decisions about the plan, they are likely considered a fiduciary under ERISA [2].
3. Executive Officers or Management: Senior executives or top-level management may also bear fiduciary responsibilities, particularly if they exercise significant control over plan decisions, such as selecting service providers or approving major plan-related expenses. Their role in guiding the plan’s direction can make them accountable as fiduciaries [3].
4. HR or Benefits Managers: Human resources or benefits managers who are involved in plan design, participant communication, and regulatory compliance may also be fiduciaries. These roles often require discretion and decision-making that directly impact plan participants, which can elevate their responsibilities under ERISA [4].
5. Third-Party Administrators (TPAs) or Service Providers: While some fiduciary functions may be outsourced, such as to TPAs or other service providers, these entities may assume fiduciary duties depending on their contractual agreements. Even though these duties are shared, the employer remains responsible for selecting and monitoring these providers, ensuring they perform their duties in the best interests of the plan participants [5].

It’s crucial for anyone who holds these roles to understand the extent of their fiduciary responsibilities. ERISA mandates that fiduciaries must act solely in the interest of plan participants and beneficiaries, following a standard of care, skill, prudence, and diligence. Failure to adhere to these standards can lead to personal liability for breaches of fiduciary duty.

To mitigate risks and ensure compliance, organizations without a formal fiduciary committee should take several key steps:

• Document Fiduciary Roles: Clearly define and document who holds fiduciary responsibilities within your organization. This can be done through corporate resolutions, job descriptions, or other formal documents.
• Provide Fiduciary Training: Ensure that individuals with fiduciary duties are well-trained and fully understand their obligations under ERISA.
• Seek Expert Advice: Consult with legal counsel or benefits professionals to clarify roles and responsibilities, and to ensure that all fiduciary duties are being met appropriately.

By taking these proactive measures, even organizations without a fiduciary committee can effectively manage their fiduciary responsibilities and safeguard the interests of their plan participants.

References:

 [1] U.S. Department of Labor. (n.d.). Meeting Your Fiduciary Responsibilities. Retrieved from https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/meeting-your-fiduciary-responsibilities 

 [2] Employee Benefits Security Administration. (2021). Understanding Retirement Plan Fees and Expenses. Retrieved from https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/understanding-retirement-plan-fees-and-expenses.pdf 

 [3] Groom Law Group. (2020). ERISA Fiduciary Responsibilities: An Overview. Retrieved from https://www.groom.com/resources/erisa-fiduciary-responsibilities-an-overview/ 

 [4] U.S. Department of Labor. (n.d.). Fiduciary Responsibilities Under ERISA. Retrieved from https://www.dol.gov/general/topic/retirement/fiduciaryresp 

 [5] Society for Human Resource Management. (2021). Outsourcing Plan Administration: Fiduciary Duties and Best Practices. Retrieved from https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/outsourcing-plan-administration.aspx 

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