Submitted by: Derek Fiorenza, COO/CCO Summit Group Retirement Planners, Inc.

The term “Fiduciary”, according to the Employee Retirement Income Security Act (ERISA), is clearly defined in the Department of Labor’s (DOL) booklet on Meeting Your Fiduciary Responsibilities. Fiduciary status is contingent on the functions that are being performed for a retirement plan, and not just their title.  Each qualified retirement plan is required to have at least one fiduciary (person or entity) named in the written plan, or described in the plan as having control over the plan’s operation.  The plan fiduciaries typically include: trustees, investment advisers, all individuals exercising discretion in administering the plan, the plan’s administrative committee, and those who select committee officials.

Fiduciaries that do not follow the standards of conduct outlined below may be personally liable to restore any losses to the plan, or restore any profits made through improper use of the plan’s assets as a result of their actions.  Although there are ways to mitigate that fiduciary responsibility by selecting advisory teams that will serve as fiduciaries for example, this liability cannot be eliminated by the named plan fiduciary.  Under ERISA, plan fiduciaries are responsible for the following:

  • Act prudently and solely in the interest of the plan’s participants and beneficiaries and with the exclusive purpose of providing benefits to them;
  • Carry out their duties prudently;
  • Follow plan documents as long as they are consistent with ERISA;
  • Provide a diverse lineup of plan investments;
  • Prohibits against self-dealing; and
  • Determine that expenses paid must be reasonable for services rendered.

Retirement Plan Lawsuits

Recently, there have been many lawsuits on excessive fees that have emerged, with some now impacting higher education (Duke University, MIT, New York University, Yale, Vanderbilt, John Hopkins University, and University of Pennsylvania).  We will focus on two lawsuits.  One is from the large plan marketplace and one is from the micro plan marketplace.

Supreme Court of the United States: Tibble Et Al. v. Edison International Et Al

Edison International’s 401(k) Plan was considered a large 401(k) Plan with an asset size in