January 28, 2023

Volume XIII, Number 28

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A Checklist for Your Retirement Plan Fiduciary Insurance Renewal

In response to the continued proliferation of lawsuits against retirement plan fiduciaries, fiduciary liability insurers are raising rates, limiting coverage, and expanding their due diligence of fiduciary processes. This article provides a checklist that includes tips and best practices for policyholders to ensure they are in a strong position to obtain retirement plan fiduciary coverage when it comes time to review and avoid coverage denials when it comes time to pay benefits.   

Checklist

  • Meet Regularly – Hold regular meetings of the retirement committee or other plan fiduciaries. These meetings are ideally held quarterly, although a less frequent meeting schedule may be appropriate for smaller plans.

  • Document, Document, Document – Take minutes at all meetings and attach to the minutes all reports from advisors that were presented. Focus on identifying the key matters considered and actions that were taken at the meeting, as opposed to transcribing everything that was said during the meeting.

  • Review Investment Performance and Fees – Regularly review the performance and fees for the plan’s investment options with an outside consultant, preferably one serving as a registered investment advisor. Remove any underperforming investment options or document why they are being retained.

  • Avoid or Address Revenue Sharing – Avoid investments with revenue sharing to the extent possible. If investments with revenue sharing are retained, clearly document why the decision to retain such investments was made and the alternatives that were considered.

  • Avoid Retail Share Classes – Avoid retail share classes of investments where a cheaper share class is available to the plan. This is, perhaps, the lowest hanging of fruits for potential plaintiffs.

  • Rationalize Active vs. Passive – Ensure there is a clear and well-documented rationale for the plan’s mix of passive versus actively managed mutual funds.

  • Review Recordkeeping Fees – Periodically review and benchmark the fees being charged by the plan’s recordkeeper with the assistance of an outside consultant.

  • Engage in RFP for Recordkeeper – At least every three to five years, engage in a request for a proposal process for recordkeeping services.

  • Inform Participants – Make investor education materials or programs available to the participants, and keep a record of these actions.

© 2023 Bradley Arant Boult Cummings LLPNational Law Review, Volume XII, Number 342
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About this Author

B. David Joffe Employment Attorney Bradley Nashville
Partner

David Joffe practices primarily in the areas of employee benefits and executive compensation law. He is the chair of the Employee Benefits and Executive Compensation Practice Group.

Retirement Plans: David advises clients on the design, implementation and administration of qualified and nonqualified benefit plans. He consults with plan sponsors, administrators and fiduciaries of private, governmental, multiemployer and church plans. David has experience with a variety of benefit plan arrangements, including traditional defined...

615-252-2368
Caleb L. Barron Employment Attorney Bradley Nashville
Associate

Caleb Barron provides advice on a broad range of employee benefits and executive compensation matters for privately and publicly held companies, churches, universities and governmental entities. He prepares governing documents for retirement, deferred compensation and welfare plans, including 401(k) plans, 403(b) plans, 457 plans, defined benefit plans, employee stock ownership plans (ESOPs), bonus plans, incentive plans, medical plans, cafeteria plans and wrap plans. Caleb advises clients in the preparation and delivery of participant communications and disclosures...

615-252-3569
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