Don’t Forget! Investment Committee Fiduciary Obligations

Fiduciaries must engage in a process to gather and evaluate the information needed to make pertinent plan decisions. Where fiduciaries lack the expertise to make those decisions, they must engage experts to help them. It is also important to know what decisions must be made. One example is, and where all of the considerations may not be obvious, the selection of share classes of mutual funds to be offered by the plan. If committee members are not knowledgeable about share classes generally, which ones are available for a particular mutual fund, and how to decide which ones to use for the plan, they need the help of an experienced plan investment consultant.

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Related Content

• Retirement Reflections (1): What Fiduciaries Need to Know
  Check out this article, the first in our series by Fred Reish of Faegre Drinker Biddle & Reath. An important duty for 401(k) committee members when exercising authority or control over the management of the plan assets is to select and monitor the investments offered to the participants. This is the primary focus of fiduciary breach litigation against plan fiduciaries.
• Investment Committee Issues for Defined Contribution Plans
  Reference this practice note identifying best practices to assist a 401(k) plan investment committee in satisfying its fiduciary obligations under the ERISA, particularly in scheduling and conducting periodic meetings.

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  • ERISA. Trump Administration freezes issuance of proposed and final regulations pending review. The White House, Regulatory Freeze Pending Review.
  • ERISA. DOL issues guidance permitting fiduciaries of an ongoing retirement plan to transmit missing participant moneys to a state unclaimed property fund if (1) the present value of the participant’s vested benefit (disregarding any outstanding loan balance) does not exceed $1,000; (2) the fiduciary determines that the transfer is a prudent destination for the participant’s vested retirement benefit; and (3) the fiduciary has implemented a prudent program to locate missing participants. DOL Field Assistance Bulletin 2025-01.
  • Executive, Incentive, and Equity-Based Compensation. IRS proposes regulations under Section 162(m). The American Rescue Plan Act of 2021 (ARPA) again expanded the definition of covered employee for purposes of Section 162(m) to apply to an additional group of five highest compensated employees who are not the CEO, CFO, or one of the three highest paid executive officers of the public corporation for that year. 90 Fed. Reg. 4691 (Jan. 16, 2025). See KPMG Report: Proposed Regulations on Additional Five Highest Compensated Employees subject to Section 162(m).
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