Fiduciary Duties

  1. Act in the best interest of participants.
  2. Act with care, skill, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
  3. Avoid prohibited transactions and be free from conflict.
  4. Diversify the investment options to minimize the risk of large losses from any one investment.
  5. Follow the plan documents and instruments governing the plan.

ERISA says a person is a fiduciary with respect to a plan to the extent that he/she:

  • exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets;
  • renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority of such plan, or has any authority or responsibility to do so; or,
  • has any discretionary authority or discretionary responsibility in the administration of such a plan.

Anyone who exercises discretion or control with regard to the plan may be a fiduciary:

  • Plan sponsors
  • Investment committees
  • Investment consultants, if they render investment advice
  • Investment managers, if they have the control over the management and disposition of the assets

Each plan must have a named fiduciary identified in the plan document.

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