Fiduciary Risk and Responsibility

Potential Liability for Breaches of Fiduciary Responsibility

Risks include:

• Fiduciaries who do not meet their responsibilities may be personally liable.
• Participants or the Department of Labor (DOL) may bring a civil action against fiduciaries.
• DOL can assess significant penalties on fiduciaries.
• Additional penalties and excise taxes for prohibited transactions.
• Criminal penalties can be imposed for certain willful violations.

Fiduciary Responsibilities: ERISA Standards of Conduct

• Act solely in the interest of plan participants—This may seem obvious, but you cannot prioritize your board, president, or local community interests over the plan participants.
• Act prudently—The duty to act prudently requires expertise in areas such as investment. Lacking that expertise, a fiduciary should hire someone with that professional knowledge. Fiduciaries are responsible for a decision process, not investment results. The process used to make decisions must be documented to show fiduciaries acted prudently.