By: Susan Hill, CPA
October 17th, 2016 | Nonprofits
According to public information, an Ivy League research university was recently accused of mismanaging its retirement plan in a federal civil lawsuit claiming $100 million in damages. While other well-known universities have been sued recently over the management of their retirement plans, this suit is the latest to target a major university’s retirement plan management and to bring under scrutiny fees charged by financial service providers by stating that the university retained expensive and poor-performing investment options that consistently underperformed their benchmarks. By keeping underperforming funds in the plan, the lawyers claim that the university breached its fiduciary duties to thousands of plan beneficiaries. Given that most nonprofits sponsor one or more employee benefit plans, it may be time to pause and ponder the question…“What is my responsibility as a plan sponsor?”
To assist in your understanding of your fiduciary duties, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has implemented a compliance assistance initiative. The Fiduciary Education Campaign is designed to improve workers’ health and retirement security by educating employers and service providers about their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA).
As a plan sponsor, you and other fiduciaries have a solemn responsibility to protect the interests of the workers and retirees in your benefit plans. Accordingly, EBSA’s program “Getting It Right-Know Your Fiduciary Responsibilities” provides employers and plan officials with an understanding of the law and their responsibilities, and focuses on steps for avoiding the most common problems EBSA encounters in its enforcement activities. The program emphasizes the obligation of plan sponsors and other fiduciaries to:
To help plan sponsors understand rules and meet their responsibilities to workers and retirees, the Fiduciary Education Campaign includes nationwide educational seminars and webcasts. In addition, tools, publications and information on correction programs have been made available. Detailed information on the seminars and webcasts as well as access to the tools, publications, and correction programs can be found here.
Among other materials, the above-referenced website includes a link to the following EBSA publications:
As you read this and begin to determine the actions that you should take to gain a better understanding of your fiduciary duties, I ask you to remember that the cost of non-compliance is always more than the cost of compliance.
Susan Hill joined Warren Averett in 2016 and is a Member in the Firm’s Tax Division. She has more than 30 years of public accounting experience, 10 of which were with Metcalf Davis prior to joining with Warren Averett. Susan is a senior level leader with experience in the areas of consulting, tax, and audit. She has handled matters from diverse angles as she has experience in industry, with the Internal Revenue Service, and in public accounting. Susan serves individuals, privately owned businesses and employee benefit plans in multiple industries in a variety of states. Nonprofit clients are also a large part of her practice area. From start-up to mature businesses, Susan strives to become a true “business partner” with all clients solving both small and large challenges.