What do you know about plan sponsor personal liability?
A plan sponsor who is the Human Resources Manager for a community group attending a Plan Sponsor University (TPSU) at Stonehill College in Massachusetts, talks about some surprising lessons learned with regard to fiduciary responsibility.
The Human Resource Manager speaks about the successes she and the company have had in engaging employees in the company 401k plan and attributes their high enrollment to the company match. But she describes how that is only a small part of being a plan sponsor.
She says it can be overwhelming for people like her, running a plan and having to comply with so many regulations. Now, she says that the new DOL conflict of interest regulation is causing her concern. Many attendees to the TPSU training programs express concern over how the lack of formal training can be dangerous in an escalating regulatory environment. Specifically, many plan sponsors are surprised when they learn that they are personally responsible (as a fiduciary) for their company-sponsored plan.
Many of the professionals are familiar with the basic definitions of fiduciary responsibility, bet a surprisingly high percentage do not fully understand that they are at risk personally for the plan. That means that they can be sued; they can potentially lose money and assets like cars, homes, etc. Being a plan sponsor can be highly rewarding, but it’s important to have professional support and know the rules of the road, so-to-speak.
Today’s retirement landscape is changing rapidly and legal liability is increasing as law firms seek to rake-in a wind-fall be initiating negligence lawsuits with alarming frequency. Not only is it important to understand what you are liable for, it is important to also ensure that in case of litigation that you are protected. Surrounding yourself with legal and industry professionals can help you avoid costly mistakes. And in the event that mistakes are made…and exposed in a lawsuit, what protections does your company provide to shield your personal assets from liability.
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