Ten Fiduciary Duties

At the 2005 ASPPA 401k Summit, Marilyn Colister, National Director of Regulatory Policy for Great-West Retirement Services, spoke on the topic "Fiduciary Responsibility in the Spotlight." Ms Colister made the point that few plan sponsors really understand their fiduciary duties and responsibilities, but because of a number of factor including the recent corporate and mutual fund scandals, class action lawsuits and a new focus by the Department of Labor and Internal Revenue Service on a number of issues including fees, plan sponsors need to be more vigilant. They also should take proactive steps to ensure that all plan fiduciaries have a good understanding of their obligations in overseeing the companies retirement plans.

Here is a general overview of fiduciary duties and responsibilities. It is not intended to be a detailed or comprehensive list, but it will give you a starting point in understanding the issues.

1. A fiduciary must act solely in the best interests and for the exclusive benefit of plan participants and beneficiaries.
2. Must defray plan expenses in a reasonable manner. This implies that a fiduciary knows what all the plan expenses and costs are.
3. Must comply with all plan documents and all applicable federal and state laws and regulations. This implies that fiduciaries will become familiar with them.
4. Where a fiduciary is unsure of their expertise, they have a duty to seek the advice of experts and carefully evaluate the advice given.
5. A fiduciary may not engage in certain transactions with parties providing services to the plan such as the sale or leasing of property, lending of money, furnishing goods, services or facilities, or the transfer or use of plan assets.
6. Self-dealing is prohibited and therefore a fiduciary cannot use their position for personal gain.
7. A fiduciary may not act on behalf of any party whose interests are adverse to the interests of the plan or the plan participants.
8. A fiduciary must act with the care, skill and diligence that would be exercised by a reasonably prudent person who is familiar with such matters.
9. Fiduciaries have an affirmative duty to diversify plan investment options.
10. A fiduciary has an obligation to prudently select investment options for the plan, as well as an obligation to periodically evaluate the performance of such vehicles to determine, based on that evaluation, whether the vehicles should continue to be available as participant investment options.
    

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: 401khelpcenter.com