Pentegra :: What You Should Know About Fiduciary Management



A retirement plan is among the most valuable employee benefits available. And while the laws governing retirement plans and their fiduciaries may appear complex, complying with them doesn't have to be.

As a plan fiduciary, Pentegra is intimately familiar with the role of the plan fiduciary and the responsibilities fiduciaries have to the plan and its participants. Understanding these responsibilities is the first step in uncovering the potential liability you face as a plan sponsor.

What is the role of a fiduciary?

Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. Using discretion in administering and managing a plan or controlling the plan's assets makes that person a fiduciary to the extent of that discretion or control. Fiduciary status is based on the functions performed for the plan, not just a person's title. A plan must have at least one fiduciary named in the written plan, having control over the plan's operation.

What is the significance of being a fiduciary?

Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan. These responsibilities include:

  • Acting solely in the interest of plan participants and their beneficiaries
  • Carrying out their duties prudently
  • Following the plan documents
  • Diversifying the plan's investments, and
  • Paying only reasonable plan expenses

The duty to act prudently is one of a fiduciary's central responsibilities under ERISA. It requires expertise in a variety of areas, such as investments. Lacking the expertise, a fiduciary will want to hire someone with that professional knowledge to carry out these functions.

What liability is involved?

With these fiduciary responsibilities, there is potential liability. Fiduciaries may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan's assets resulting from their actions.

Should you be concerned?

  • Does your retirement plan have an updated IRS-approved document in place?
  • Has your plan been designed so it is customized to meet the needs of your company?
  • If you, your family or company have ownership rights in any other businesses, have you received advice concerning the possible consequences to your plan?
  • Are the plan fiduciaries aware of their responsibilities under ERISA?
  • Have the plan's investment fiduciaries been appointed in accordance with the plan and trust documents?
  • Do your plan committee members and other fiduciaries meet at least annually?
  • Is a due diligence file maintained with information and supporting documentation for plan and investment decisions made at the fiduciary meetings?
  • Do the plan fiduciaries ensure the plan collects and invests the employee deferrals as timely as possible?
  • Is your plan covered by a fidelity bond?
  • Does your plan have a written Investment Policy Statement?
  • Does your plan have investments covering a broad range of investment categories?
  • Have the plan fiduciaries reviewed the plan's investments in the last 12 months?
  • Was the review documented?
  • Do you fully understand all investment costs and the services provided for those costs?
  • Has an investment from your plan been removed or placed on "watch" because it has underperformed?
  • Does your plan provide employee enrollment and education programs explaining the importance of participation, saving for retirement and investment basics?
  • Does your plan provide lifestyle funds or asset allocation models for employees who lack investment knowledge?
  • Have all participants received information about each of the options available in the plan?

The Pentegra Advantage

We offer something truly unique in the retirement plan industry-the ability to completely outsource primary fiduciary responsibility for the management of a retirement program-something no other provider offers.

We offer two ways to help financial institutions with fiduciary responsibilities. Our unique multiple employer plans offer clients the added advantage of full fiduciary protection. Under our multiple employer retirement plans-the Pentegra Defined Benefit Plan for Financial Institutions and the Pentegra Defined Contribution Plan for Financial Institutions-our President and Board of Directors relieve you and your Board of the primary fiduciary liabilities associated with running a retirement program.

Under our single employer programs-defined benefits plans, defined contribution plans and executive benefit plans-we offer investment fiduciary protection, relieving plan sponsors of the burden of due diligence and ongoing monitoring of plan investments.

As an ERISA-named plan administrator and principal fiduciary for more than six decades, our policies, procedures and business practices are conducted with the highest level of integrity-a longstanding tradition at Pentegra. One less worry, one more advantage.