Are You Personally Liable For Your Company's Retirement
Plan?
ERISA imposes personal liability on company
officials who select the investments for 401(k) plans (the fiduciaries).
This means some corporate officers (including CFOs, controllers,
and financial managers) could loose much or all of their savings,
homes and financial security to lawsuits by dissatisfied participants.
Following ERISA's stringent guidelines can
mitigate personal liability, but does your company comply with the
regulations?
Companies of all sizes often fail to invest the time
or internal resources necessary to comply with all of ERISA's requirements.
And, many providers of 401(k) and profit-sharing plans (stock brokers,
mutual fund and insurance companies, banks, trust departments, etc.)
neither adequately educate employers on their fiduciary requirements
nor design their retirement packages to include fiduciary compliance.
How do you protect against personal liability?
According to ERISA law, you must ensure that your company's plan
is in compliance (not just intending to be in compliance)
with §404(a) and §404(c) provisions. The DOL position
is clear, as stated in their brief filed in the Enron case:
- Plan sponsors (fiduciaries) are responsible for their
selection of investment alternatives.
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- Only plans that fully comply with ERISA §404(c)
will have protection against liability for the results
of participant investment allocation decisions.
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By complying with ERISA §404(a) and §404(c), fiduciaries
will help limit their potential liability. More importantly, such
compliance will produce a 401(k) plan that is understood and appreciated
by participants because it yields higher quality plan benefits.
To learn more, please download 
"401(k) INVESTMENTS: Satisfying ERISA's Fiduciary Rules”
by Fred Reish & Franklin Santagate—Source: CFMA
Building Profits, Construction Financial Management
Association, Princeton, NJ (www.cfma.org).
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