Fiduciary Responsibilities Explained

What are ‘fiduciary responsibilities’ and what do they have to do with my small business 401K plan? –Mitch Campbell, Oklahoma- Owner of a cake shop chain

A retirement plan is a valuable benefit that you offer to your employees. Your staff and their beneficiaries gain some great advantages with a small business 401K plan and so do you, the employer. As the employer setting up the account, you have some responsibilities to meet too. The Employee Retirement Income Security Act (ERISA) outlines the responsibilities you need to meet when managing the 401K plan and its assets, also called fiduciaries.

When you first set up your 401K plan you also create a plan outline that describes it exhaustively. This plan also gives a guideline to operating the plan, managing it and tracking it. Carrying out these responsibilities in line with the plan document is your primary fiduciary responsibility. Different people, involved in some way with your 401K plan may bear different kinds of fiduciary responsibility depending on the functions that they carry out for the 401K.

Some examples of fiduciary responsibility are carrying out investment with the participants’ best interests at heart, ensuring that unnecessary expenses are not incurred etc. Failure to adhere to your fiduciary responsibility can make you liable to making good any losses sustained by the plan’s participants owing to your negligence.

You can however limit your liability by documenting all your actions and related processes to show that you have fulfilled your responsibilities to the best of your ability. Using a software suite like http://401ksolution.com helps you keep informed about ERISA guidelines so that you can always be in compliance with the law.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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