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What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
What are Your Fiduciary Responsibilities?
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What are Your Fiduciary Responsibilities?

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Presentation on 1/20/12

Presentation on 1/20/12

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  • 1. WHAT ARE YOUR FIDUCIARYRESPONSIBILITIES?GAIN CONTROL berrydunn.com
  • 2. FIDUCIARY RESPONSIBILITYWhat does it mean to be a fiduciary?• Act solely in the interest of participants• Act prudently• Follow the plan documents• Diversify plan investments• Pay only reasonable plan expensesGAIN CONTROL
  • 3. FIDUCIARY RESPONSIBILITYWho is a fiduciary?• Actions speak louder than words! − Exercises discretionary authority or control − Provides investment advice for a fee − Has discretionary authority or responsibility• Named Fiduciary• Investment Manager• Trustee• Investment advisor• Plan administratorGAIN CONTROL
  • 4. FIDUCIARY RESPONSIBILITYDirected Trustee Discretionary Trustee• Most common type of • Exclusive authority and outside trustee discretion over the management and control of• Has custody of plan assets plan assets• No discretionary authority Acts on instructions from a fiduciary with discretionary authority• Lacks requisite authority over plan or its assetsGAIN CONTROL
  • 5. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Duty of Loyalty• Prudence (prudent expert standard)• Diversification• Follow the plan documents• Establish proper proceduresGAIN CONTROL
  • 6. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Select & monitor plan service providers − Are fees reasonable? − How to determine reasonableness? − Hire a consultant − Monitor the industry regarding fee developments − Consult with peer companies − Use a benchmarking service − Conduct a Request for Proposal (RFP) process − Are providers doing what they are hired to do?GAIN CONTROL
  • 7. FIDUCIARY RESPONSIBILITYGeorge v. Kraft Food case (7th circuit 2011)• Class action by participants challenging 401(k) plan recordkeeping fees − Same service provider for 13 years without requesting competitive bids − Consultant hired found fees to be comparable and reasonable Court: evidence of prudence but not a complete defense − Take-away: Follow defensible process to determine reasonableness and document such process and decisionsGAIN CONTROL
  • 8. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Select & monitor plan investments − This responsibility cannot be eliminated!!! − How to monitor? − Use an outside consultant? − What is an Investment Policy Statement? − Why use it? − How frequent? − What are benchmarks? − When to make changes?GAIN CONTROL
  • 9. FIDUCIARY RESPONSIBILITYExamples of Consequences forResponsibilities Failures• Distribute required notices • Prohibited transaction• File required forms • Personal liability• Deposit EE contributions • Civil/Criminal liability• Amend plan documents• Don’t forget about terminated participants!!GAIN CONTROL
  • 10. FIDUCIARY RESPONSIBILITYHow to protect a fiduciary?• Corporate Indemnification• Fiduciary liability insuranceGAIN CONTROL
  • 11. FIDUCIARY RESPONSIBILITYHow to limit fiduciary responsibility?• Document, document, document!!!• 404(c) Sufficient information to make informed decisions• Qualified Default Investment Alternative (QDIA)• Automatic IRA RolloverGAIN CONTROL

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