CUNA Mutual Group offers fiduciary responsibility checklist


CUNA Mutual Group has developed a checklist intended to help credit union leaders assess their fiduciary responsibilities as a retirement plan sponsor. While the assessment is not a substitute for a comprehensive compliance review, plan administrators and others can use the questionnaire to assess their plan’s compliance.

If you answer “No” to any of the questions below, you should review your plan’s operations because you may not be in full compliance with Employee Retirement Income Security Act’s requirements:

Has a fiduciary or group of fiduciaries been named for the plan and have the fiduciary obligations under ERISA been communicated?

A fiduciary is anyone who:

  • has authority under the plan to manage plan investments or who actually exercises control over those investments.
  • gives advice about plan investments for a fee.
  • has discretionary authority for the administration of the plan.

There are two types of fiduciaries: named fiduciaries (including appointed fiduciaries) and functional fiduciaries. The distinction is important.

A named fiduciary is a person or committee who is given fiduciary responsibility by the terms of a plan. This process of naming fiduciaries should be documented and maintained by the plan sponsor.

A functional fiduciary is someone who is not authorized by the plan document to manage the plan or its assets, but who in fact exercises discretionary control over the administration of the plan or the handling of its investments.

Does your plan have a written investment policy statement?

An IPS is the documented “road map” on how to select the investment options made available to the plan’s participants. At least one federal court has concluded that, based on the facts of the case, the failure of the plan fiduciaries to have an IPS was a breach of ERISA’s general fiduciary rules. However, there is currently no explicit requirement in ERISA that an IPS be prepared. At a minimum, it should be viewed as a prudent fiduciary practice to prepare an IPS.

Is there a fiduciary committee that meets on a regular basis to discuss the following?

  • The investment performance of each fund. Performance criteria for selection and monitoring investments should include:
    • the performance of the investments over one, three, five, and ten-year periods as compared to the appropriate index and/or to the peer group;
    • the expense ratio of each fund compared to the average expense ratio of the funds in its peer group; and
    • the tenure of the manager and the stability of the staff at the investment management firm.
  • Whether or not to take action regarding a specific investment as specified in the terms of the IPS. A failure to follow the terms of the IPS is a fiduciary breach.
  • Participant educational needs? ERISA requires that fiduciaries evaluate the providers of investment education, understand the content and delivery of those services, and monitor the effectiveness and quality of the educational resources available to participants.

Will the service provider supply independent benchmarking reports at its own expense to show the cost and quality of services are aligned with the industry?

Every three to four years, it is a best practice for plan sponsors to confirm their understanding of their plan’s investments and to verify their plan’s pricing is still competitive. The Department of Labor has provided a fee disclosure template that may be helpful in understanding the overall pricing of a plan.

Once the fee structure is understood, it is imperative to also assess whether the service value provided for that cost is adequately meeting the needs of both the plan sponsor and the participants.

Do you maintain a due diligence documentation file?

The plan should have a due diligence file for the selection of each provider and adviser, including all the information reviewed and the contract with the provider. In addition, the plan should have a separate file for each plan year for the ongoing monitoring of the operation and investments. Plan records should be kept for at least 6 years.

Do fiduciaries understand prohibited transaction rules?

The prohibited transaction rules forbid certain transactions with persons and entities that are closely related to the plan (“parties in interest”). In addition, they specifically prohibit self-dealing transactions by the fiduciaries.

Have you provided plan participants with the following documents?

  • Summary Plan Description;
  • Summaries of any Material Modifications;
  • 404(a)(5) participant fee disclosures; and
  • Safe harbor or other required notices.

Providing information to plan participants is an important part of the fiduciary duties.

If the plan currently seeks protection under ERISA 404(c), have plan participants been given written notice that they can direct their own investments and that the plan intends to meet the requirements of ERISA 404(c), which limits plan fiduciaries’ potential liability for participant investment decisions?

Taking advantage of some of the fiduciary protections offered by ERISA law is generally considered a best practice. Although plan fiduciaries will still be responsible for the investments selected for the plan, individual participants bear the responsibility for how they decide to allocate their contributions among your plan’s investment options.

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