FIDUCIARIES

Fiduciary Liability - Where does it come from?

• Employee Retirement Income Security Act (ERISA) of 1974.
• Common Law.
• State Statute.

• Fiduciaries.
• "Surprised Fiduciaries."
• "Parties in interest."
• Employees of above

• Fines.
• PERSONAL LIABILITY WHICH SURVIVES BANKRUPTCY!!!

• The person who administers your company's benefits.
• Anyone who is involved in the rendering of:
  a) Management of benefit plans and their assets.
  b) Investment advice to benefit plans or their participants

• Company officers and directors.
• Member's of a plan's Investment or Administrative Committee.
• Insurance Agents, Stock Brokers, and Accountants.

• Despite any indemnification agreement that may exist, EACH FIDUCIARY IS PERSONALLY RESPONSIBLE to the benefit plan for any loss caused by improper action, or inaction, on his/her part.
• If two or more fiduciaries both contribute to a loss EACH IS LIABLE FOR THE FULL AMOUNT AND NEITHER CAN MAKE THE OTHER SHARE THE REPAYMENT.

• Fiduciary/Employer failed to carry required amount of Fidelity cover at time of loss (ERISA requires, as a minimum, Fidelity cover in the amount of 10% of the plan funds or $500,000, whichever is less).
• Fiduciary/Employer failed to realize that the above bonding requirement applies separately to every plan sponsored by the employer. An employer sponsoring a pension plan, a health insurance plan, a group life plan, a sick day plan and a paid vacation plan could easily have a $2,500,000 Fidelity coverage obligation!
• Imprudent choice of insurance company, mutual fund or third-party service provider.
• Faulty advice or counsel!
• Fiduciary purchases Fiduciary liability cover with his/her own money is subject to insurer's "RIGHT OF RECOVERY" clause against any insured who breaches their fiduciary responsibility.
• Improper amendments to plan documents
• Denial or change of benefits
• Improper disclosure to plan participants
• Administrative error, etc.

• Insurance for this exposure is cheap depending on asset size - - premiums usually run from $100 to $1,000 annually.
  CALL FOR AN APPLICATION SO A PRECISE COVERAGE/PREMIUM QUOTATION CAN BE GIVEN!

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