How to Teach Fiduciary Responsibility to Plan Committees

Sponsors of retirement plans, especially those covered by the Employee Retirement Income Security Act, must ensure their retirement plan committee members are trained to understand and execute their fiduciary duties.

To do so, plans find fiduciary education and training from regulators, existing providers and a wide variety of sources. They may consult the Department of Labor, nonprofit professional human resource management associations and existing providers as sources of retirement oversight committee education and training, enabling committee members to understand their fiduciary duties.

Regardless of the education and training sources selected, tools and training must ensure the committee members know they are bound under the law to operate the retirement plan in accordance with the Employee Retirement Income Security Act. The 1974 law mandates that retirement plan committees must “run the plan solely in the interests of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.”

Two defined contribution plan sponsors—Ingevity Corp., offering a 401(k) plan, and MRIGlobal, providing a 403(b) plan—described how they provide their committees with tools and training.

Committees’ Fiduciary Responsibility

Individuals who serve on a retirement plan committee take on the role of plan fiduciary. Were the plan to violate ERISA and face legal action, committee members could be personally liable to restore any losses to the plan or to restore any profits made through improper use of plan assets, DOL regulations state.  

“The big thing that the committee needs to be educated about is their fiduciary role under ERISA, and that’s a very high standard that ERISA imposes,” explains ERISA attorney Joan Neri, counsel at Faegre Drinker Biddle & Reath LLP.

Operating a plan in accordance with ERISA is a “huge fiduciary responsibility,” says Tamra Miller, benefits manager at Ingevity, a South Carolina-based specialty chemicals company. Ensuring the plan is operated “responsibly by people who know what they’re doing” is critical.  

Ingevity’s committee convenes regular meetings both fiduciary compliance and to talk about plan compliance, she adds: “Your [fiduciary] responsibility really is to the participants, and you want to make sure that the people making those decisions for the plan are making them based on the right information.”

Monica De Agostino, human resources manager at Kansas City, Missouri-based MRIGlobal, an independent, not-for-profit, contract research organization, says an overarching goal of each committee education tool and training is “being proactive” and “setting the members up for success.”

Finding Committee Education and Training

Ingevity and MRIGlobal use different education and training sources, but both strive to ensure that committee members understand their fiduciary responsibility. Retirement benefits and committee oversight requires that members remain informed.

There is “a lot of reading, obviously,” says Miller.

The plan sponsor consults their ERISA counsel as the “best source of information,” Miller explains. “I rely on my ERISA counsel a lot; also two of my [benefits] brokers.”

Complying with legislation such as the SECURE 2.0 Act of 2022 may require Miller to consult recordkeeper and 401(k) administrator Empower; the Society for Human Resource Management; and the International Foundation for Employee Benefit Plans, she adds.

MRIGlobal works closely with management consulting company CBIZ to bolster plan oversight and educate and train the retirement plan committee, says De Agostino. 

“While we were doing our [recent fiduciary] training, we were also doing our own checks and balances as we were going through” plan data, comparing MRIGlobal’s plan fees and best practices to those of competitors, says De Agostino. 

Although the committee members “understand the concept of fiduciary, the duty to minimize plan risks, document the fiduciary process” and that they are responsible for “making sure we do what’s best for our [retirement plan] participants,” CBIZ added value, she says.  

“What CBIZ was able to do, as our trainers and fiduciary [and] as our adviser: They were able to also help us score ourselves, as we were looking at how are we doing and what are the areas for improvement that we have?” De Agostino says.

Using Education and Training Tactics

Plan sponsors must keep close and consult often the DOL’s guidance booklet, Meeting Your Fiduciary Responsibilities, explains MRIGlobal’s retirement plan adviser, Jack Keller, a vice president at CBIZ. Keller distributes the DOL booklet, which outlines how to monitor plan fees, “from the horse’s mouth,” he says, following every client training.

Fiduciaries “don’t have to make perfect decisions, but they have to make prudent decisions,” Keller explains. “As a fiduciary, you have a real legal responsibility in overseeing these plans and participant assets.”

Making prudent fiduciary decisions for the plan involves staying informed and monitoring recordkeeping, administration and investment fees, adds Keller. Sponsors should know that “[plan] fees don’t have to be the lowest, but they need to be competitive and benchmarked, also, with the services provided,” he explains.  

The MRIGlobal 403(b) plan also uses CBIZ as a 3(21) adviser to provide advice about the plan’s investment lineup, while leaving final discretion over the plan to the plan sponsor.

CBIZ works with third parties RPAG to assess the plan’s investment fees and Ann Schleck & Co. LLC to secure financial consulting services, explains Keller.

Education Formats and Frequency

Retirement plan committees should convene meetings at least twice per year, including one session dedicated to fiduciary training, advises Theresa Conti, a senior consultant at retirement company and plan consultant July Business Services, while adding some committees have as many as four meetings per year.

For best results, Conti advises working with the plan sponsor’s adviser.

Finding education and training “should be driven by the financial adviser,” Conti says. “I always view them as the quarterback of the plan, connecting the plan sponsor with the service providers, TPAs [and] recordkeepers.”

Another alternative, for plans that use a 3(16) fiduciary, is, “maybe [committee tools and training] can be driven instead by the 3(16), or in conjunction with 3(16) and the adviser,” she says.

A 3(16) fiduciary is a third party responsible for the administrative duties of the retirement plan, from determining plan eligibility to processing plan changes, while a 3(21) adviser works with the plan’s investments.

Consulting with July—as MRIGlobal collaborates with existing provider CBIZ—to thoroughly examine the plan to improve it, plan sponsors may similarly secure fiduciary services that add value, Conti says. Plan sponsors can consult with their existing providers to “help with topics,” and Conti can follow up with the plan to correct any issues, she adds.  

July will consult with sponsors on longer-term plan issues, following the plan’s yearly rote tasks, completing compliance testing and filing its Form 5500, Conti says.

For sponsors, after completing annual compliance tasks is a suitable time to benefit from the expertise of existing providers such as July that can examine the plan, addressing “things that we found; the things we need to change; things that we should do differently next year; a plan amendment that we need; or are we going to switch some of our design? It [also] gives [the provider] the opportunity to talk through [changes] with the SECURE 2.0 legislation,” Conti says. 

Testing, Testing: 1, 2, 3

Neri uses follow-up trainings to evaluate committee members’ understanding of materials, confirming if they understand and have retained the information. 

“When I do follow-up training, I often do conduct that in sort of an engaged Q&A format, and it gives me a feeling as to whether or not the members understand,” she explains. “If they don’t, then I drill down.”

Plan sponsors have also started using workplace tools to test committee members’ knowledge with a quiz about the materials they learned, adds Keller. 

“We did [training] for another client where there is a quiz and there are online modules … [for obtaining] the certificate of completion,” he says.

Conti notes that such quizzes, to certify completion and obtain fiduciary certification, more frequently “in bigger companies” than at smaller firms.