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Plan Sponsor Fiduciary Responsibilities
ERISA requires the retirement
plan be operated for the exclusive benefit of plan participants.
Compliance with the Employee Retirement Income Security
Act (ERISA) has been a major concern of plan sponsors
since this legislation was passed in 1974. The complexity
of ERISA has led to a widespread lack of understanding
of its basic principles and lack of understanding of
liabilities to which plan sponsors may be subjected.
These rules, governed by the Department of Labor (DOL),
impose heavy responsibilities on any persons involved
in the management of employee benefit plans. Unfortunately,
many are not aware of the responsibilities and liabilities
and penalties until they find themselves in violation
of the Act. ERISA was enacted to protect the interests
of plan participants from discriminatory practices.
ERISA also provided a federal standard of conduct to
be followed concerning the management of retirement
plan assets.
Anyone who is a trustee, sponsor or otherwise exercises
any authority of control over any type of employee benefit
plan is a fiduciary. The fiduciary should act with the
"care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would
use in the conduct of an enterprise of like character
and with like aims." (ERISA Sec. 404(a)(1)(b))
Any fiduciary that breaches
ERISA's fiduciary obligations can be held personally
liable for losses caused by that breach of duty.
Pleading ignorance, bad communications or inexperience
will not be adequate legal defenses. Delegation
to prudent experts and the proper overseeing of them
are the only defenses upon which a fiduciary can rely.
Plan Sponsors need consultants who are up to date with
issues, which may have been detrimental to the plan
and its participants. Through Plan Sponsor Alerts, Insurance
Office of America's compliance team continually informs
sponsors and participants of pending legislative changes
and allegations that may affect the plan.
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