Companies that sponsor qualified retirement plans have a fiduciary duty to prudently select and monitor the investment options offered in their plan. Failure to meet this fiduciary standard can expose plan sponsors to costly litigation in which they could face personal liability.
As a retirement plan fiduciary, you are held to what’s referred to as the “prudent expert” standard. According to ERISA, this means you must act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use.”
According to this standard, a plan sponsor must be more than a prudent layperson — a sponsor must be a prudent investment professional. If no one on your staff would meet this criteria, you might consider hiring an outside expert to help you make prudent investment selection decisions.
There are three main types of investment experts from which to choose:
Contact us if you have more questions about your fiduciary duty as a plan sponsor.
