PLANSPONSOR - August/September 2018 - 54

ERISA EXAMINATION
Fiduciary Training
Guidance, tools are needed to succeed
H
as your committee received fiduciary training?
Hopefully the answer is yes. While there is no fiduciary
training requirement under the Employee Retirement
Income Security Act (ERISA), this is a question the Department
of Labor (DOL) asks during its investigations. If the answer is no,
there is no penalty or violation, but we expect that the DOL may
look closer at how the committee operates, in order to determine
whether a fiduciary breach has occurred. Further, plan fiduciaries
are often required to receive fiduciary
training pursuant to litigation settlements
and DOL enforcement actions.
Besides being able to give the DOL
the right answer during an investigation,
plan sponsors benefit from fiduciary
training in that it ensures committee
members understand their duties and
responsibilities. Let's face it-not all of
ERISA is intuitive, and most committee
members are not ERISA experts.
When should committee members
* Understanding the fiduciary role. This covers, specifically,
when the committee members are acting as fiduciaries vs. when
they are acting as the employer/settlor of the plan, without a fiduciary
responsibility.
* Fiduciary governance. Part of the training should explain
Often overlooked
follow the plan's
governing
receive the training? New members
should be trained as soon as possible.
But it's a lot of information, and it doesn't
always stick the first time. Annual or periodic
refresher sessions going over fiduciary
rules and responsibilities can help
committee members stay out of trouble.
Including a regular fiduciary/legal update on the agenda for
documents (e.g.,
plan document,
investment policy
statement, etc.).
each quarterly meeting also helps. You can invite your friendly
attorneys to attend and present. (Wouldn't it be fun to see us on a
more regular basis?) There are many 401(k) and 403(b) fiduciary
litigation cases going on now, and committee members should
know what the issues are and what those mean for their retirement
plan.
Two key ERISA fiduciary concepts should be highlighted
as part of the training. First, when making fiduciary decisions,
committee members must act solely in the interest of the plan
participants and beneficiaries. Second, process, process, process.
Did we mention process? The committee must go through a good
process, gathering and considering all of the relevant information
for purposes of making fiduciary decisions. These two key
concepts should be intertwined with the following specific topics:
is the committee's
obligation to
the flow of fiduciary responsibilities and who has which ones.
For example, the board of directors may delegate plan administration
authority to the committee. This means the committee
must report back to the board periodically
so the latter can monitor its fiduciary
delegation.
* Monitoring fees and service
providers. In addition to selecting the
plan's service providers, the committee
has an ongoing duty to monitor those
providers and their fees for reasonableness.
Training can be a good way to drive
home the importance of this duty, and
also to highlight, for example, what can
and cannot be paid by the plan.
* Plan documentation. Often overlooked
is the committee's obligation to
follow the plan's governing documents-
e.g., plan document, investment policy
statement (IPS), etc.
* Fiduciary liability, including
co-fiduciary liability. Fiduciary training
is the time to explain the personal liability that attaches to a fiduciary's
breach as well as to a co-fiduciary's breach if the fiduciary
is aware of an issue and takes no steps to remedy it.
* Prohibited transactions. ERISA prohibits transactions
between the plan and " parties in interest " as well as self-dealing.
We will address this complicated subject in a future column, so
for now suffice it to say this is another set of rules the committee
must follow.
Going over these fiduciary issues as part of regular fiduciary
training helps protect the plan and helps the committee if
or when it comes time to face the DOL or a plaintiff.
Summer Conley is a partner in the Los Angeles office of
Drinker Biddle & Reath LLP. Michael Rosenbaum is a partner
in the firm's Chicago office.
54 PLANSPONSOR.com August-September 2018 Art by Joseph Ciardiello
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