Establishing a retirement plan committee is a best practice. The board should pass a resolution delegating some of the fiduciary responsibilities to the committee, which should establish bylaws defining roles and responsibilities. Even if you are not named as a fiduciary, if you are a participant in a retirement plan committee and you have fiduciary-like duties, the U.S. Department of Labor (DOL) considers you a functional fiduciary and you have the same liabilities and responsibilities as a fiduciary.
Not every activity or every action is a fiduciary action. DOL defines three different types of activities: fiduciary, settlor, and ministerial functions.
- The fiduciary is anyone who has discretion or control over the plan or the plan’s assets. This person selects and monitors plan investments, and can appoint other plan fiduciaries.
- Settlor functions are those typically related to plan design, such as establishment of a plan, determination of who the plan will cover and designing the benefit offerings. This is important because settlor functions are not subject to the same fiduciary status when making these decisions.
- Ministerial functions are administrative actions that do not entail any discretionary authority. The main responsibilities are to carry out what the functions of the plan document, without decision-making power.
