Are Plan Documents Relevant to Fiduciary Duties?
Many plan documents are requirements. So too, are fiduciary duties. Do the two intersect?
In “Those Pesky Plan Documents…What Do They Have To Do With my Fiduciary Duties?
” Deborah Fabricant in Boutwell Fay LLP’s Benefits News blog argues that plan documents are central to fulfilling fiduciary duties. “Worrying about plan documents probably is not keeping most plan fiduciaries up at night…but maybe it should,” she writes.
Why? Fabricant contends that while plan fiduciaries are aware that they have a duty to exercise prudence and loyalty, they “may not be tuned into” what she calls a “sleeper duty” — the “equally important duty to follow that terms of their written plan documents.”
This, she says, can catch plan fiduciaries by surprise — but it does so at their peril, since that risks action by the Department of Labor (DOL) and/or private parties. And they should not confuse passing muster with the IRS with full compliance with DOL requirements under ERISA, she warns, observing that even making changes through the IRS’ Employee Compliance Resolution System (EPCRS) does not equate to meeting all fiduciary responsibilities.
Fabricant cites the language in ERISA Section 404(a)(1)(D) that requires a fiduciary to fulfill duties in the interest of plan participants and beneficiaries “in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent [with ERISA].” She says that this involves a duty to know and follow the plan documents’ terms and to review those documents to make sure they are consistent with ERISA.
Fabricant also details steps that a plan fiduciary can take to avoid violating their duties concerning plan documents: by identifying the governing plan documents, reviewing the documents and considering the language used in those documents.