Virtually all plan documents name the sponsor as “plan administrator.” Typically the Board of Directors of a company (sponsor) is seen as the official governing body of the sponsor, and thus plan document language directs that they, in effect, are the plan administrator. Most Boards of Directors are not involved in the day-to-day operations or decision making in regards to their plans, thus without effective delegation of authority they are likely not following the terms of their plan document and are violating their fiduciary responsibilities. The Board of Directors’ Resolutions documents them following the terms of their plan document and officially delegating authority to a committee. With such delegation they are now only responsible for monitoring the committee (perhaps an annual review of committee meeting minutes) rather than bearing the day-to-day fiduciary responsibility of the plan. A Committee Charter helps to bracket what are, and are not, the fiduciary responsibilities delegated to the Committee and therefore limits their potential liability exposure to only those responsibilities delegated. The Acceptances are meant to bracket the duration of the Committee members’ exposure to liability. They shouldn’t be liable for actions taken prior to becoming fiduciaries, but they may be required to remedy any breaches that occurred prior or failure to do so may be considered a subsequent breach.
This article was derived from “Retirement Times”. The “Retirement Times” is published monthly by Retirement Plan Advisory Group’s marketing team. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent. (c) 2015. Retirement Plan Advisory Group. ACR#161752 11/15.