401(k): Fiduciary Duties

Your fiduciary duties as a plan sponsor are outlined in ERISA Section 404(a). This is the part of the code that states that as a plan fiduciary you are required to “discharge your duties…with the care, skill and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.”
 
What does that mean? It means that being a plan fiduciary requires ongoing due diligence in an ever changing regulatory, economic, and market environment. It also implies that as a plan fiduciary you are expected to be a prudent investment manager and that you may need to benchmark your plan relative to key variables.
 
As a plan sponsor, you cannot delegate away your fiduciary role. However, you can partner with an advisor to transfer some of your fiduciary duties on to them.
 
We’ve outlined some key elements of two vital ERISA code sections below. In the meantime, you may wish to answer the question: When was the last time you benchmarked your plan relative to regulatory requirements, critical quantitative variables and your current advisor’s ability to assist in fulfilling your fiduciary role?
 
*The steps under ERISA 404(a) and 404(c) are numerous and complex. The above is only an overview.

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Andy Paladino is an investment adviser representative of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E. Fulton St., Ada, MI 49301. Paladino Financial Group is not affiliated with USA Financial Securities.

Andrew J. Paladino, CPA, MSF is authorized to transact securities related business and investment advisory services only in states where he is properly registered. For investment products and services these states include: AZ, CA, CO, CT, DC, DE, FL, KY, MA, MD, MN, NC, NY, NM, OH, PA, SD, TX, VA, WA and WV. For investment advisory services these states include: CA, DE, FL, MD, OH, PA, VA, WA. This website is not intended to provide investment, legal, or tax advice, nor to effect securities transactions or to render personal advice for compensation.

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