While most people that touch a company’s defined contribution (DC) plan like a 401k or 403b are fiduciaries, and a growing number of advisors will be under the DOL conflict of interest rule set to go into effect April 10, 2017, some people are still confused. According to a short YouTube video produced by a Maryland based plan advisor, nearly one-third of people are confused about whether they are a fiduciary on their company’s DC plan – more if you ask Tony Robbins.
So what questions should you ask to determine whether you are a plan fiduciary?
- Are you named on the plan documents?
- Do you exercise control of management or administration of the plan or the assets?
- Do you provide advice to the plan or the participants?
- Do you select or supervise other fiduciaries?
- Do you sit on the Committee which oversees the plan?
Answering yes to any of these questions probably means that you are a fiduciary. In fact, if you have any decision making authority over the plan, you probably would be considered to be one which is why many plans are looking into getting ERISA fiduciary insurance likely not covered by current company insurance policies.
With many plan sponsors also enlisting participants to be part of their Investment Committee, more companies are looking into ways not just to protect them through insurance but also to educate them on how to fulfill their duties effectively. Which also holds true for managers, even seasoned finance professionals. Just because they understand how to read a balance sheet or are savvy investors does not mean that they understand the complexities of ERISA which could are put the company at risk for fines and audits by the DOL which is getting more aggressive expected only to continue under their new rule.
