CAPTRUST, a noted plan advisory firm, lays out the wisdom from working with 1500 plans of all sizes of how to form and run effective ERISA fiduciary committees for defined contribution (DC) plans like 401(k)s and 403(b)s. As an employer sponsoring a retirement plan, fiduciary responsibility under ERISA carries the highest level of responsibility known to law. But before you get scared, there are ways to discharge these responsibilities if you take time on the front end of the process.
A DC plan must be designed in the sole interest of the participants and fees must be reasonable. Investments should be diverse and monitored working from a guiding document like an investment policy statement (IPS). The composition of the fiduciary committee usually includes representatives from finance, HR and operations – not all committees include legal as they may have a conflict if litigation should arise. Some committees include outside partners like the plan advisor but usually not the record keeper.
Best practices dictate that regularly scheduled meetings should have a strict agenda not taking too much time with the proceedings documented. Discussions should be open which means no person should dominate which is why most committees do not include the owner or CEO. Finally, members of the committee should receive some sort of formal training
Committees are important to helping plan sponsors fulfill their fiduciary responsibility and, even better, creating a plan that works for the company and the people running it as well as the participants in the plan. But setting up and running the committee will make all the difference and the brief outline provided by this national advisory firm is a good starting point.
