Process and documentation
Part Two: Strategies to limit your liability
Among the most effective steps a fiduciary can take to limit liability are:
- Establish and follow procedures for fiduciary decisions and plan oversight
- Document the steps and reasons underlying fiduciary decisions
TABLE OF CONTENTS
Part 1: Fiduciary Rules
• What do I need to do if I am a fiduciary?
• Delegation of fiduciary responsibilities
• Consequences of breach of fiduciary duties
• Employee Retirement Income Security Act of 1974 (ERISA) Requirements
Part 2: Strategies to limit your liability
• Compliance with ERISA Section 404(c)
• Selection and monitoring of service providers
Part 3: Managing your fiduciary responsibilities
• Managing your fiduciary responsibilities
There is a significant amount of case law indicating that a fiduciary is not to be judged in hindsight. In other words, whether the fiduciary made the “right” decision is not dispositive of whether fiduciary liability will be imposed. Instead, the determination of whether a fiduciary has violated the Employee Retirement Income Security Act of 1974 (ERISA) focuses on whether the decision was the result of a prudent decision-making process.
Accordingly, one way to mitigate fiduciary risk is to establish and follow decision-making procedures and document the steps and reasoning underlying decisions (i.e., substantive and procedural prudence). Along those lines, to the extent the fiduciary relied on information and advice from others, documentation is critical to establishing the qualifications of such expert, the substance of the advice, and the scope for which the expert was consulted.
BACK NEXT