What is a Fiduciary?

A plan’s fiduciary (or fiduciaries) has a very important role. They must always put the plan’s interest first and must always act for the benefit of the plan. They must provide benefits to participants (and beneficiaries) and also try to keep plan costs down.

ERISA defines a fiduciary as someone:

  • Who exercises discretionary control or authority over plan management or plan assets,
  • With discretionary authority or responsibility for the administration of a plan, or,
  • Who provides investment advice to a plan for compensation or has any authority or responsibility to do so.

Even if someone is not specifically named as a fiduciary, if they do any of the three things above, they become a fiduciary.

These people generally ARE plan fiduciaries:

  • Any named trustee of the plan (usually the owner, or other executives)
  • The Plan Administrator (this is usually the employer – not the TPA)
  • The investment advisor (this is new as of 2017!)
  • Anyone who is making decisions about how the plan’s investments are handled. Even if the person is not named as a trustee or advisor, the fact that they are making these decisions makes them a fiduciary.

These people generally ARE NOT plan fiduciaries (their duties are described as “ministerial”):

  • Accountants/auditors
  • Actuaries
  • Attorneys
  • Consultants
  • Third party administrators (TPAs)

Fiduciaries are required to do what is best for the plan. For example – fiduciaries should routinely review their plan’s service providers and fees charged to make sure that the fees are reasonable. Accountants, TPAs, and other non-fiduciaries can help provide this information to the fiduciary. All the fiduciary has to do is ask. Often it is easier for a TPA to decipher a fee disclosure than it is for a plan sponsor. A TPA can also point the plan sponsor to where they need to go in order to discover any and all fees that they may be paying.

If you need help reviewing your plan, please feel free to reach out to us. Part of the service we provide includes reviewing your plan to make sure it’s working right for you.

P.S. If you are curious, here is the list of things that the DOL deems to be ministerial in nature (source):

  1. Application of rules determining eligibility for participation or benefits;
  2. Calculation of services and compensation credits for benefits;
  3. Preparation of employee communications material;
  4. Maintenance of participants’ service and employment records;
  5. Preparation of reports required by government agencies;
  6. Calculation of benefits;
  7. Orientation of new participants and advising participants of their rights and options under the plan;
  8. Collection of contributions and application of contributions as provided in the plan;
  9. Preparation of reports concerning participants’ benefits;
  10. Processing of claims; and
  11. Making recommendations to others for decisions with respect to plan administration.