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Employee Retirement Income Security Act (ERISA): Fiduciaries


ERISA: An Overview

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that protects an individual’s rights to benefits under employee benefit plans. Under a plan governed by ERISA, only fiduciaries can be held liable for any violations of the Act. Therefore, whether an individual and/or entity is a fiduciary is a key first step in determining ERISA violations.

Who can be an ERISA plan fiduciary?

Under ERISA, an individual is a fiduciary if they (i) exercise any discretionary authority or control over management of the plan or exercises any authority or control over management or disposition of a plan’s assets; (ii) render investment advice for compensation, regarding any moneys or property of the plan, or have any authority or responsibility to do so; or (iii) have any discretionary authority or responsibility in the plan’s administration. Such parameters adhere to Congress’ intent that the definition of “fiduciary” cover a broad range of individuals.

For an individual who meets one of the above requirements to be eligible as a fiduciary, he or she must not have been convicted of most felonies during, or for the period of thirteen years after, conviction or after the end of imprisonment, whichever is later.

How to become an ERISA fiduciary.

To become an ERISA fiduciary, such status can either be designated by the plan documents or assumed when the individual engages in certain conduct. However, the individual who becomes a fiduciary by engaging in conduct does not eliminate their fiduciary duty merely because they believed they were not a fiduciary.

Under ERISA, every employee benefit plan must be established and maintained under a written document that designates certain fiduciaries. However, most plans designate fiduciaries by position rather than by an individual’s name. Additionally, due to the broad nature of the “fiduciary” definition in the Act, an individual can also be a fiduciary based upon their powers and duties regarding the plan. Therefore, an individual does not have to hold a specific position or role to be a fiduciary under ERISA if they meet one of the above requirements.

If I follow the directions of a fiduciary, do I become a fiduciary?

Under ERISA, following the instructions of a fiduciary, as an “agent” of that fiduciary, does not necessarily make the agent an ERISA fiduciary. However, the factors above will be relevant in determining whether the agent, in acting at the direction of the fiduciary, then becomes a fiduciary.

Terminating fiduciary status.

Is saying you no longer want to be an ERISA fiduciary enough to terminate the relationship? No, this is likely insufficient. Generally, an individual’s resignation terminates his or her fiduciary
duties. However, there must be an “effective resignation” that complies with the steps and/or requirements set forth in the applicable ERISA plan to terminate fiduciary duties.

If you feel your rights under ERISA have been violated, or if you have any other questions regarding your employment rights, please contact the experienced Birmingham employment law attorneys at Michel | King. You can contact us either online or by calling us at (205) 3199724. We are here to serve you!

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