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The retirement plan industry is in the trillions of dollars in value. And, over the past few years, the role of a fiduciary has received
much attention.


ERISA defines fiduciary as someone who uses discretion in administering and managing a benefit plan or who controls a plan's assets. A fiduciary has the authority to make decisions about the manner in which plans are overseen and implemented.


The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.


In general, fiduciaries must:

  • Act prudently – perform their duties with care, skill and diligence in each area in which they make decisions for the plan.

  • Follow the terms of plan documents - to the extent that the plan terms are consistent with ERISA.

  • Communicate with plan participants – provide disclosures to plan participants and beneficiaries; primarily, Summary Plan Description (SPD), benefit statements, investment information.

  • Periodically monitor investments - diversify and periodically monitor the plan's investments in order to minimize the risk of large losses.

  • Avoid conflicts of interest - do not engage in transactions on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, services providers or the plan sponsor. – avoid “prohibited transactions”.


Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.




  • Named Fiduciary – you are designated in the plan document by name or title having authority to control and manage the operation and administration of the plan – primarily, Plan Trustees and Plan Sponsor (company owners).


  • Functional Fiduciary - you exercise discretionary authority over; the plan management, administration, assets or provide investment advice to the plan for compensation.


To minimize the potential for liabilities, be sure to work with a Third Party Administrator (TPA) and a Professional Plan Consultant (PPC    ).
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