5.2.1.1 Fiduciary Responsibility
Under ERISA, employers offering their employees a retirement plan are required to act as fiduciaries, or a trusted party who acts in the best interests of another party. This definition also extends to include most of the outside providers and advisers who work with the plan. Ultimately, this means that employers and professionals working with the plan have both a legal and an ethical obligation to ensure that the retirement plan they offer is in place to serve the employees (not the employer) and that the decisions made regarding that plan are clearly in the best interest of the employees.
As a fiduciary, a company and the employees overseeing the plan must strive to:
• Provide reasonable investment options
• Manage the plan’s costs
• Avoid unnecessary risk associated with the plan
• Handle the administrative requests of plan participants in a timely fashion
• Educate employees regarding their investment options and the investing process
To comply with ERISA and limit a fiduciary’s liability, a plan must offer at least three different investment choices. Further, those choices need to be