Fiduciaries have a lot of responsibility when making decisions regarding plan management. A fiduciary must act solely in the interest of the plan participants and their beneficiaries. Fiduciaries’ responsibilities include carrying out their duties with respect to the plan with care, skill, prudence and diligence, following the terms of the plan document, diversifying plan assets and paying only fair and reasonable expenses.
Fiduciary liability can include both criminal penalties and civil action. A fiduciary is personally liable for any losses resulting from a breach and the penalties can be severe. While fiduciaries/trustees may look to hire outside professionals as co-fiduciaries, they still have the responsibility to monitor such individuals or entities. Failure to do so exposes the fiduciary to liability.
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