Today, the main buzzwords that often come up when discussing a retirement plan relate to a trustee or owner’s “fiduciary liability.” By acting as a trustee for your company’s retirement plan, you should be aware of the liabilities and potential penalties involved.
So, what are the potential risks when you act as a trustee?
- Personally liable to make good on any losses resulting from the breach of the plan
- May be required to restore any profits that might have been gained by improperly using plan assets
- Subject to an excise tax of 15 percent of the amount per year until corrected
- Potential penalty of 20 percent if the Department of Labor is involved
- Co-fiduciary liability for participating in, concealing or not stopping the breach of another Fiduciary
While you can’t relieve yourself completely of all fiduciary liabilities, you can take certain steps to help alleviate that liability, by:
- Always acting in the best interest of the participants; and
- Avoiding prohibited transactions.
To gain confidence you’re acting in an employees’ best interest, it may be prudent to have someone perform an assessment of your current plan. The main items to assess are the investment options, plan fees and overall set up of the plan. In addition, ensure that you are reviewing the plan on an annual basis and keep documentation of those meetings.
If you would like to learn more about additional 401k fiduciary solutions, please visit www.401kcomplete.com.