ERISA fiduciary

Definition

ERISA fiduciaries are individuals or entities with discretionary authority over the administration or management of an ERISA-covered plan (most employer-sponsored retirement and welfare plans). Fiduciaries are bound by strict duties: loyalty (acting solely in plan participants' interests), prudence (acting with the care a prudent expert would use), diversification (for investment decisions), and adherence to plan documents.

Fiduciary breaches can result in personal liability — fiduciaries can be required to make plans whole for losses caused by their breaches. Fiduciary liability insurance is increasingly common.

In PEO arrangements, the PEO is typically the named fiduciary and plan administrator for the master plan covering the co-employed workforce. This is a meaningful liability transfer — the PEO assumes fiduciary responsibility for the plans, not the client.

Common questions about ERISA fiduciary

Related terms

• Employee Retirement Income Security Act (ERISA) — A 1974 federal law that sets minimum standards for most voluntary pension and health plans in private industry.
• 401(k) plan — A tax-advantaged employer-sponsored retirement savings plan that allows employees to defer wages on a pre-tax or Roth basis.
• Group health insurance — Health insurance purchased by an employer to cover its employees, typically at lower per-employee cost than individual policies.

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