Make sure you get the plan services you were promised

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People can promise you the moon, but they may deliver far less. That is why despite the promises made by your plan providers; you should always read their contract to determine whether they are actually delivering you what they promised.

A years back, an advisor looking at a prospective client showed me the agreement that the potential clients had with their current ERISA §3(38) fiduciary. The only problem is that there was nothing in the contract that suggested that the fiduciary was an ERISA §3(38) fiduciary or was exercising discretionary authority over the fiduciary process. So for all intensive purposes, the provider may be providing the service, but the contract says differently.  So imagine if the plan sponsor has to sue the fiduciary for a breach of fiduciary duty and realize that the contract doesn’t protect them because the contract never claimed they were getting that 3(38) service.

So rather than taking the plan provider’s word, I recommend all plan sponsors to read those contracts to make sure they got what they bargained for. Otherwise, it’s another breach of fiduciary duty.

- See more at: http://therosenbaumlawfirm.com/blog/?p=1799#sthash.711fDtrn.dpuf

People can promise you the moon, but they may deliver far less. That is why despite the promises made by your plan providers; you should always read their contract to determine whether they are actually delivering you what they promised.

A years back, an advisor looking at a prospective client showed me the agreement that the potential clients had with their current ERISA §3(38) fiduciary. The only problem is that there was nothing in the contract that suggested that the fiduciary was an ERISA §3(38) fiduciary or was exercising discretionary authority over the fiduciary process. So for all intensive purposes, the provider may be providing the service, but the contract says differently.  So imagine if the plan sponsor has to sue the fiduciary for a breach of fiduciary duty and realize that the contract doesn’t protect them because the contract never claimed they were getting that 3(38) service.

So rather than taking the plan provider’s word, I recommend all plan sponsors to read those contracts to make sure they got what they bargained for. Otherwise, it’s another breach of fiduciary duty.

 

 

Topics:  Employee Benefits, ERISA, Fiduciary Duty, Service Contracts

Published In: General Business Updates, Finance & Banking Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

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