We’ve been looking in recent posts at the fiduciary duty retirement plan administrators owe employees with respect to monitoring appointed investment advisors for 401(k) plans. As we noted last time, the duty does not entail constant, direct monitoring of investment advisers, but enough attention to detail that the employer is able to take corrective action as necessary.
According to the Michigan Chamber of Commerce, employers should establish monitoring policy which allows for corrective action when certain events take place. Such events include: significant changes in the investment market; amendments in the plan or investment policy; changes in law; receipt of significant news concerning an investment adviser or an investment; and when there are concerns about an investment advisor’s work or the type or location of the investment.
Properly exercising its fiduciary duties under ERISA is not necessarily an easy matter for employers, particularly those who do not have a nuanced understanding of the law. It can be easy to get into trouble, and mistakes in this area can be potentially costly, particularly when an employer is targeted by ERISA litigation.
Fiduciary duties apply not only to management of employee retirement accounts, of course, but also to the management of health insurance plans. As with retirement plans, employers and other plan fiduciaries are required to manage health insurance plans for the sole benefit of the participants, act according to the ERISA-consistent documents governing the plan, pay only reasonable expenses under the plan, and act prudently in carrying out their duties under the plan.
Working with experienced legal counsel can help ensure an employer not only understands its fiduciary duties under ERISA with respect to managing health and retirement plans, but also that its policies and practices are consistent with those duties and that its interests are zealously protected when disputes arise.
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