What are the 4 basic fiduciary standards under the Fiduciary Standard of Care? (Section 404)
- ANSWER 1.) Loyalty - (Exclusive purpose rule - Providing benefits to participants and
their beneficiaries; and defraying reasonable expenses of administering the plan)
2.) Prudence - (Act with prudence by investigating before making any plan decisions, docu-
menting the decision-making process, hiring experts when they don't possess the knowledge
or skills to make a decision, and monitoring if their decisions are still ideal based on the ex-
clusive purpose rule and taking action if not
3.) Diversification - (Diversify investment in a prudent manner in order to minimize risk; In-
vestment factors may include purpose of plan, amount of assets, investment acumen of the
participants and participant demographics
4.) Following the plan's governing documents - (Follow plan documents to the extent that
they are not contrary to ERISA rules)
How many fiduciaries does a retirement plan? - ANSWER All retirement plans have one
or more fiduciaries
Plan fiduciaries have a legal obligation to operate the plan on behalf of ...? (Primary rule of
ERISA) - ANSWER Plan participants and their beneficiaries, and not on behalf of owners,
the employer, or key employees
Who will almost always be a fiduciary to the plan? - ANSWER 1.) Plan Sponsor
2.) Plan Trustee
3.) Plan Administrator
Which of these statements about personal liability is true? - ANSWER *All fiduciaries
have personal liability
1
, What does it meant to be a plan fiduciary? It means you have the responsibility to...? - AN-
SWER 1.) Act prudently
2.) Operate the plan according to the plan document
3.) Act exclusively in the interests of the plan participants and beneficiaries
4.) Run the plan for the exclusive purposes of providing benefits and paying plan expenses
Which of the following is a fiduciary duty under ERISA? - ANSWER *Following the plan's
governing documents
Classify the task as the responsibility of a plan administrator or a trustee - File Form 5500? -
ANSWER Plan Administrator
I have other people working as the Trustee and Plan Administrator. As the Plan Sponsor,
what are my fiduciary duties to the plan? - ANSWER 1.) Prudently select and monitor one
or more named fiduciaries to operate the plan
2.) Maintain plan records
Classify the task as the responsibility of a plan administrator or a trustee - Prudently select
and monitor investment managers? - ANSWER Trustee
Classify the task as the responsibility of a plan administrator or a trustee - Provide partici-
pant fee disclosures? - ANSWER Plan Administrator
Classify the task as the responsibility of a plan administrator or a trustee - Provide Partici-
pant Benefit Statements? - ANSWER Plan Administrator
Classify the task as the responsibility of a plan administrator or a trustee - Pursue monies
owed to the plan? - ANSWER Trustee
2
- ANSWER 1.) Loyalty - (Exclusive purpose rule - Providing benefits to participants and
their beneficiaries; and defraying reasonable expenses of administering the plan)
2.) Prudence - (Act with prudence by investigating before making any plan decisions, docu-
menting the decision-making process, hiring experts when they don't possess the knowledge
or skills to make a decision, and monitoring if their decisions are still ideal based on the ex-
clusive purpose rule and taking action if not
3.) Diversification - (Diversify investment in a prudent manner in order to minimize risk; In-
vestment factors may include purpose of plan, amount of assets, investment acumen of the
participants and participant demographics
4.) Following the plan's governing documents - (Follow plan documents to the extent that
they are not contrary to ERISA rules)
How many fiduciaries does a retirement plan? - ANSWER All retirement plans have one
or more fiduciaries
Plan fiduciaries have a legal obligation to operate the plan on behalf of ...? (Primary rule of
ERISA) - ANSWER Plan participants and their beneficiaries, and not on behalf of owners,
the employer, or key employees
Who will almost always be a fiduciary to the plan? - ANSWER 1.) Plan Sponsor
2.) Plan Trustee
3.) Plan Administrator
Which of these statements about personal liability is true? - ANSWER *All fiduciaries
have personal liability
1
, What does it meant to be a plan fiduciary? It means you have the responsibility to...? - AN-
SWER 1.) Act prudently
2.) Operate the plan according to the plan document
3.) Act exclusively in the interests of the plan participants and beneficiaries
4.) Run the plan for the exclusive purposes of providing benefits and paying plan expenses
Which of the following is a fiduciary duty under ERISA? - ANSWER *Following the plan's
governing documents
Classify the task as the responsibility of a plan administrator or a trustee - File Form 5500? -
ANSWER Plan Administrator
I have other people working as the Trustee and Plan Administrator. As the Plan Sponsor,
what are my fiduciary duties to the plan? - ANSWER 1.) Prudently select and monitor one
or more named fiduciaries to operate the plan
2.) Maintain plan records
Classify the task as the responsibility of a plan administrator or a trustee - Prudently select
and monitor investment managers? - ANSWER Trustee
Classify the task as the responsibility of a plan administrator or a trustee - Provide partici-
pant fee disclosures? - ANSWER Plan Administrator
Classify the task as the responsibility of a plan administrator or a trustee - Provide Partici-
pant Benefit Statements? - ANSWER Plan Administrator
Classify the task as the responsibility of a plan administrator or a trustee - Pursue monies
owed to the plan? - ANSWER Trustee
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