I am asked this question a lot, “What exactly does it mean to be a fiduciary and what am I responsible for?â€
Often, most people don’t understand the complexity and responsibility of being a plan fiduciary and don’t understand that plan fiduciaries may be held PERSONALLY LIABLE for breaching their duties. This means that your personal assets are at risk, and in some circumstances, you could even face jail time if you are found guilty of violating your fiduciary duty.
It is important that you understand your role as a plan fiduciary. ERISA assigns certain duties to plan fiduciaries and you must carry them out thoughtfully and diligently. If you don’t, your inaction may result in serious consequences, to both you personally and to the plan.
A plan fiduciary is any person or entity named in the plan document (Have you read your plan document lately?), any person or entity that has discretionary authority over the management of the retirement plan or its assets (all individuals exercising discretion in the administration of the plan, all members of a plan’s administrative committee and those who select committee officials), and any person or entity that offers investment advice with respect to plan assets (for a fee).
The overriding rule is that plan fiduciaries are required to act prudently, and solely in the best interests of the plan’s participants and beneficiaries. Failure to do so can have serious consequences.
And, just because you hire a fiduciary does not mean that you are now not a fiduciary. You must do your due diligence and hire a partner with the knowledge and expertise to help you carry out the administrative functions of your 401k.
