The C-suites of American companies which sponsor qualified retirement plans face a difficult task when appointing retirement plan fiduciaries. A plan fiduciary’s duties are normally an add-on to the normal responsibilities they carry-out on a daily basis. The role of a plan fiduciary is complex. It comes with no manual and a tremendous amount of personal and corporate responsibility.
As recently reported by 401kTV Founder and Editor-in-Chief, Fred Barstein, plan sponsors are currently focusing on litigation and fees – and for very good reason. A plethora of lawsuits related to 401k Plans have been dropped at the doorsteps of very large and well-respected companies and organizations (such as Boeing Co., Xerox, Fidelity, Lockheed Martin Corp., TRowe Price, Hartford, Massachusetts Institute of Technology, Bechtel Corp., Kraft Foods, Deere & Co., General Dynamics Corp – to name a few). The stakes have been raised for all and plan sponsors need to remain aware and vigilant.
A Ray of Good News
Recently a federal court rejected the claim of a Plaintiff in a case against the American Airlines Corp 401(k) plan. In the case Plaintiff counsel alleged Breach of Fiduciary Duty by failing to consider investment structures that would cost less than mutual funds (which were being used in the plan during the time period in question). The good news is for plan sponsors and it surfaces in the form of well thought out decisions coming from the bench when it comes to comprehending fiduciary responsibility and prudence. The entire American Airlines Corp case was not dismissed but fortunately a knowledgeable judge made quick-work of some of the arguments.
Tips for Plan Sponsors When Selecting Trustees
The complicated task of establishing a Retirement Committee or a Benefits Committee come with some basic Do’s and Don’t’s. The following is not an exhaustive list – but it is a good start at fielding your dream-team of Retirement-committee members.
- Interview your potential committee members;
- Find staff members with competencies in Finance, HR, Payroll Communications, Securities, Legal and Accounting; and
- Identify individuals with the ability to LEARN versus ACT.
- Select employees who cannot make regular meetings
- Select individuals who have a felony conviction; and
- Select people who do not have an eye-for-detail.
A Retirement Committee is only as good as the weakest member on it. Selecting the right fiduciaries is as important as selecting the right advisor or vendor.
Latest posts by Steff Chalk (see all)
- 401k Plan Education Remains High Priority - December 4, 2018
- 401k Auto-Escalation Increases Participant Savings - October 21, 2018
- 401k Auto Plan Features Attract Attention - October 2, 2018