Understanding ERISA Plan Fiduciary Responsibilities

The Employee Retirement Income Security Act (ERISA) aims to protect the assets of your plan, but many are not well-informed on the responsibilities of the fiduciary who control or have authority over their plan. The first thing to understand is what a fiduciary is. Simply put, a fiduciary is someone who acts in your interests when it comes to your retirement plan.

The second part is understanding ERISA regulations of employee benefits.

What ERISA Does

• Requires plans to inform participants about plan features and funding.
• Guarantees payment of certain benefits.
• Requires plan fiduciaries to be accountable for following principles of conduct and may be responsible for restoring losses to the plan.
• Requires plan sponsors to give enough funding for the plan.
• Defines how long someone must work to be eligible for a plan.
• Sets participation, vesting, benefit accrual and funding standards.
• Gives participants the right to sue for breaches of fiduciary duties.

Fiduciary Standards Set by ERISA

ERISA has a specific set of standards of conduct for a fiduciary that acts on behalf of a plan’s beneficiary. These include:

• Prudent Expert Rule. All fiduciaries must be experts in their field of decision-making. Even further, they must act with care and prudence when making those decisions, and should use the skill and diligence of others similarly situated.
• Exclusive Benefit Rule. The functions performed must be in the interest of the plan’s participants rather than the company or the fiduciary. This helps alleviate the risk for conflicts of interest.
• Diversification Rule. When a fiduciary has control and authority over the investment, they are required to ensure the assets are best diversified. This helps lower the risk for a huge investment loss.
• Anti- Self-Dealing Rule. Every action must be conducted without any conflict of interest, along with any self-dealing. Under this rule, every type of prohibited transaction is legally required to be avoided.
• Plan Documents Rule. The fiduciary is legally required to follow the terms and conditions of the plan. This means the fiduciary, no matter how well-meaning, cannot make decisions that fall outside of the plan in place.

If you have concerns about your retirement plan funds, talk to one of our Pennsylvania Workers Compensation lawyers at Vanasse Law today. We will help you navigate the intricacies of ERISA law.