Named fiduciaries are not necessarily responsible for all fiduciary duties. The plan may permit a named fiduciary to allocate duties among other named fiduciaries or delegate fiduciary duties to someone other than a named fiduciary. For example, the named fiduciary may appoint an investment manager, claims administrator, or other fiduciary. This does not transfer or eliminate all of the named fiduciary’s responsibilities. The selection, appointment, and monitoring of other fiduciaries are themselves fiduciary functions, so the named fiduciary retains responsibility for those duties
TABLE OF CONTENTS
Part 1: Fiduciary Rules
Part 2: Strategies to limit your liability
Part 3: Your Protection Plan
However, if the appointing fiduciary follows the plan’s terms, exercises prudence in the delegation process, and then properly monitors the fiduciaries it appoints, the named fiduciary will likely be protected from liability for any negligent acts of such delegates.
Keep in mind there’s a difference, however, between appointing a person/hiring a service provider to undertake a fiduciary function and hiring a service provider to help carry out the function in a non-fiduciary capacity at the direction of the fiduciary. For example, the employer may appoint a committee to serve as the fiduciary plan administrator of the plan. The employer may then hire a recordkeeper to keep records of the plan and perform various administrative functions at the direction of the fiduciary plan administrator. In that case, the recordkeeper is not a fiduciary of the plan, even though it is assisting in the administration of the plan, so long as the recordkeeper does not exercise discretion in carrying out its services. While both delegating a fiduciary function or hiring a non-fiduciary service provider require prudent selection and monitoring, the delegation of a fiduciary function implicates ERISA's cofiduciary provision which is an additional consideration when deciding whether to hire in a fiduciary as opposed to in a non-fiduciary capacity.