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Managing Fiduciary Risk

A retirement plan can give you a competitive advantage for recruiting and retaining top talent and can be a rewarding way to show appreciation for your employees. It can also expose you to significant risk in the absence of proper education and management.

In fact, the U.S. Supreme Court ruling in Tibble v. Edison International confirmed employer responsibility for ongoing monitoring of 401(k) investments for continued prudence.

For employers, the takeaway is that fiduciary breaches can have significant liability implications. Plan sponsors are subject to a number of fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA) that may easily be overlooked. Whether you have 10 employees or 10,000, this includes:

  • Ongoing monitoring of investments
  • Evaluation of performance and costs
  • Meeting investment policy criteria
  • Staying on top of contributions
  • Annual compliance testing
  • Filing annual required informational forms
  • Managing employee enrollment and coverage

A lifesaver on the side of a boat.

With so many obligations, oversights can happen, and penalties can be steep. You could face corrections programs, damages, fines or worse - disqualification and mandatory distribution of your plan, taxable as ordinary income. A corporate trustee who knows the business of advising retirement plan sponsors can provide guidance.

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