Retirement plans: Building an Investment Committee for Effective and Efficient Decision


Most plan sponsors understand the need to have a well structured retirement plan or investment committee functioning as a fiduciary under ERISA for their retirement plan. However, how that committee should be structured, who should serve on that committee what their roles should be, how the committee operates and what records should the committee keep are questions seldom asked, and even more rarely answered.

Plan sponsors always, and employees responsible for managing the plan’s operations and investments sometimes, are fiduciaries under ERISA – which means that each of them risk corporate and personal assets in the event of a breach of any of their fiduciary duties. At times, each fiduciary will also be personally liable for breaches of each other fiduciary to the plan.

The stakes are huge. Liability, even for what the industry considers a “small plan” can seem unlimited. Even fiduciaries who have conducted themselves with the utmost care can find themselves defendants in litigation alleging losses resulting from wrongdoing.

“Building an investment Committee for Effective and Efficient Decision Making” provides a roadmap to allow plan sponsors, their advisors and fiduciaries to understand the process of structuring an effective fiduciary committee, including identifying who should serve on it, the process of making decisions, reviewing those decisions, and reviewing the process of decision making itself, and sufficiently documenting the process(es) undertaken in making fiduciary decisions.

While it really isn’t possible for fiduciaries to completely shield themselves from liability, by understanding their role with respect to ERISA, properly functioning as an individual and as a member of a committee consistent with the precepts of ERISA, and properly documenting the decision making process provides the best defense to allegations of fiduciary failures. “Building an investment Committee for Effective and Efficient Decision Making” provides an important part of that understanding necessary to be a better fiduciary, and to manage that risk.

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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.

© Michael Olah, Michael J. Olah & Associates, LLC | Attorney Advertising

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