Proper Oversight Keeps a Plan Running Smoothly By John Schafer, VP, National Leader, Financial Institutions Channel, Pentegra Watch an Olympic gymnast compete in floor exercise, and it seems as if the routines are almost effortless. But years of practice and endless hours of perfecting moves creates this demonstration of strength and grace. Now compare a toddler’s tumbling maneuvers on the living room floor. While we may congratulate them with Olympic‑sized enthusiasm, we know that there may soon be a crash with the end table. In some ways, plan sponsors who insist on administering every aspect of their retirement plan may be like our inexperienced toddlers: They may be good at running their business — but they may not be fully aware of the technical details and fiduciary risk involved when it comes to administering a retirement plan. By partnering with a fiduciary expert, plan sponsors can stay ahead of potential plan problems and ensure compliance with retirement plan rules and regulations. Plan Fiduciary Basics Because this is such a pivotal part of maintaining a retirement plan, we often revisit the importance of knowing — and fulfilling — plan sponsors’ fiduciary duties. Black’s Law Dictionary defines “fiduciary” as “one who must exercise a high standard of care in managing another’s money or property.” This may seem straightforward. But over the years, legal decisions and guidance from the IRS (and other federal agencies) have given us more detail about what this means in the context of retirement plans. In a nutshell, here are some of the fundamental tenets that plan fiduciaries need to know. • Plan sponsors (employers) are always considered fiduciaries. • Fiduciaries have a duty to administer a plan for the exclusive benefit of plan participants and their beneficiaries. • Fiduciaries who violate their duties can be held personally liable for a breach. • Fiduciaries may delegate certain duties (for example, day-to-day administration) to third parties. • In the event certain responsibilities are delegated to third parties, plan sponsors still have the responsibility to prudently choose those service providers — and to regularly monitor their performance. 20 West Virginia Banker
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