Fiduciary Training Wins in Court!

January 4, 2022

Under ERISA, plan sponsors – and plan committee members – are considered fiduciaries because of their responsibility for the plan and discretion over how the plan is operated. Plan fiduciaries are expected to meet the highest standards of conduct in operating an ERISA plan. Fiduciary training and education can help plan sponsors understand these standards and develop a process to uphold them.

In a recent Federal district court opinion in Missouri*, investment management firm American Century successfully defended itself against allegations that its conduct in operating its own 401(k) plan failed to meet ERISA’s high standards. A critical component in American Century’s victory was the court’s recognition that the plan committee received fiduciary training and understood the importance of this duty.

The Committee also held regular meetings, utilized the Investment Policy Statement (IPS) for guidance in selecting and monitoring investments, relied on independent consultant reports and recommendations and documented Committee decisions. Their strong processes led to the Court concluding that:

  • The Committee members made careful investigations of investment decisions and acted in the best interests of the Plan participants
  • The evidence shows the Committee followed a prudent process in monitoring and retaining funds in the Plan
  • The Committee reviewed independent information to ensure the fees were reasonable in light of the fund’s performance and level of risk.

The Wildman v. American Century opinion demonstrates the importance of developing and maintaining strong practices and procedures in operating a retirement plan. The establishment of prudent practices begins with fiduciary training and education for Committee members.

Contact Centurion Group to schedule fiduciary training for your Committee and establish best practices to minimize liability for your retirement plan.