Do you know what responsibilities and duties your 401(k) plan fiduciaries must meet when managing Employee Retirement Income Security Act (ERISA) covered benefit plans? If you do not, you may be at risk of plan mismanagement.
Most employees trust that their company will prudently manage their retirement plan in place. Unfortunately, workers often do not pay enough attention to how retirement plan sponsors and administrators manage their retirement savings. The fiduciaries of ERISA plans must comply with several standards of conduct on behalf of the participants (and their beneficiaries) in employer-sponsored programs.
What are some of their basic duties?
One of the most critical duties of fiduciaries in 401(k) ERISA plans is to act solely in the best interests of plan participants and their beneficiaries. This is known as the duty of loyalty. Other responsibilities of fiduciaries include, but are not limited to, the following:
- Be prudent (sensible, careful, etc.) when carrying out their fiduciary duties
- Follow ERISA-consistent benefit plan documents
- Monitor how investment options and service providers perform
- Avoid financial transactions that serve the interests of plan fiduciaries rather than plan participants
- Offer 401(k) plan participants a range of investment alternatives
- Provide employees with information (quarterly statements, investment details, etc.)
If plan fiduciaries disregard their responsibilities, it can harm employees and their designated beneficiaries. For example, if administrators or fiduciaries do not diversify investments or offer unreasonably expensive and/or underperforming investment alternatives, plan participants may face substantial financial losses.
If mismanagement of your ERISA-covered 401(k) occurs, the involved fiduciaries may be held liable for any financial losses you experience. A court may order the fiduciaries to restore lost profits or remove them from their role as a plan fiduciary.
ERISA claims are complex, but you can find a solution by learning more about the laws that govern ERISA-covered 401(k) retirement plans.