DOL Investigators Quiz Plan Sponsors On Training of Fiduciaries, Attorneys Say


The Department of Labor is looking into fiduciary training as part of the agency's investigations into retirement plans, attorneys at Trucker Huss in San Francisco told Bloomberg BNA.

The attorneys had taken part in a recent webinar on the basics of retirement plan committees, and later Bloomberg BNA asked them to share some of their real-life experiences relating to fiduciary training under the Employee Retirement Income Security Act.

Nicholas J. White, special counsel with Trucker Huss, said Oct. 1 that DOL investigators raised the issue of fiduciary training or education in two recent cases he worked on. In neither case, however, he said, was the topic of fiduciary training mentioned in the letter closing the investigation.

“As part of the interview [of one client], not only did DOL   investigators ask the typical questions about the identity of the [ERISA]  Plan Administrator and the practices and procedures of the plan committee, but also whether there had been any education for the plan committee,” he said.

White said that in that case the plan sponsor hadn't undertaken any fiduciary training, nor was there much formality in terms of the operation of the plan committee. The closing letter focused primarily on the issue of late deposit of employee deferrals, he said.

White said he was somewhat surprised by the absence of any comment regarding the practices and procedures of the plan committee, even more so than by the fact that the DOL investigator had asked about education for the committee.

“I thought there would be some comment about this. I thought there would be some recommendation that the plan committee review its practices and procedures and make changes as necessary to ensure compliance with ERISA's fiduciary rules,” he said.

In a second case, the investigators also asked about training for the committee, White said. In that case, there was some basic formality and operation in terms of a plan committee, but again, there hadn't been any specific fiduciary education in this regard. However, he said, when the plan was established, another lawyer had addressed fiduciary issues with several of the individuals who ultimately served as members of the plan committee, and this point was highlighted for the DOL investigator. There was no mention of fiduciary education in the closing letter for that investigation either, he said. Likely the DOL investigators weren't acting on their own when they asked the questions, he said.

“If they are asking questions like that, I would think this is an indication that there is some direction from higher levels at the DOL that this issue should be looked into,” he said.

R. Bradford Huss, director at Trucker Huss, told Bloomberg BNA Oct. 3 that said some of his clients also have been asked about fiduciary training , and many have had a ready response to that question. “A number of our clients have training for their committees on a regular basis, every two to three years, and orientation sessions for new committee members,” he said.

Direct Engagement

The fact that some DOL investigators have asked plan sponsors about their fiduciary education should encourage sponsors and their advisers to address the fiduciary education process more directly, White said.

Too many plan  sponsors  and their advisers are not taking full advantage of the educational opportunities that certain crucial plan -related documents can provide, he said.

White said that three documents can initiate the education process for fiduciaries. The first is the board of directors' resolution establishing the committee. The second is the committee charter that provides a roadmap for the committee's activities, including its membership, appointment, responsibilities and procedures. The third is the investment policy statement.

“Too often these documents are put together in ‘legalese' without a thought as to how educational they can be if worded in plain terms to address the roles, responsibilities and obligations of plan  committee members under ERISA,” White said. “Sure, there are some legal formalities that need to be captured in the documents, but you should also take care to word them in a manner such that they can serve as an educational tool for the committee members in understanding their obligations and liabilities under ERISA,” he said.

Plan sponsors should use conversational language in the plan documents in order to make them more understandable to the committee members, White said.

Excerpted from a story that ran in Pension & Benefits Daily (10/24/2013).