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Proxies and Fiduciary Responsibilities

January 28, 2025 (4 min read)

Fiduciaries of ERISA employee benefit plans must manage plan assets that involve securities (which can be in the form of corporate stock or mutual funds) and may be required to make and monitor decisions about voting proxies and exercising shareholder rights with respect to such securities. Proxy voting is important, as investors generally control the makeup of the board, the compensation of executives, general compensation policies, capital structure, and more. It also can implicate social and corporate responsibility issues, including factors that consider environmental footprint, social goals, or corporate governance. ERISA plan fiduciaries who have the authority to vote proxies or exercise shareholder rights for an ERISA plan must do so in a manner that complies with ERISA's fiduciary duties. Learn more about the topic with this practice note.

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Related Content

  • Retirement Reflections (1): What Fiduciaries Need to Know
    Read this article by Fred Reish of Faegre Drinker, the first in his Retirement Reflections series, which addresses the basic question of who is a fiduciary and what are their duties. Investment committees often are the plan’s designated fiduciary. Not often discussed, they also can be responsible for the plan’s administrative decisions (not just plan investment decisions) and these responsibilities (and liability) don’t necessarily flow, in whole, to the plan’s service providers.
  • ERISA Retirement Plan Investment Resource Kit
    Reference this resource kit for more content addressing fiduciary responsibilities regarding the administration of an ERISA employee benefit plan, including setting up the plan (addressing the differences between settlor and fiduciary functions), plan administration, and governance of an investment committee or other fiduciary committee for a qualified retirement plan or other ERISA employee benefit plan.  

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.      

  • Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
    Stay informed on new developments.
    • Retirement Plans. EBSA updates rules regarding its Voluntary Fiduciary Correction Program (VFCP). 90 Fed. Reg. 4192 (Jan. 15, 2025). Coincident with the revised VFCP, EBSA amends PTE 2002-51, Prohibited Transaction Exemption 2002-51 to Permit Certain Transactions Identified in the Voluntary Fiduciary Correction Program, to facilitate the VFCP amendments. 90 Fed. Reg. 3667 (Jan. 15, 2025).
    • Retirement Plans. EBSA proposes 29 CFR Part 2510 regulations that would clarify the definition of “adequate consideration” as set forth in ERISA Section 3(18)(B) and a proposes a class exemption from certain prohibited transaction restrictions in connection with an ESOP’s initial acquisition of privately held employer stock from a selling shareholder.  90 Fed. Reg. ___. Subsequently paused by Executive Action.
    • Health and Welfare Plans. DOL issues a report to certain Congressional committees on MHPAEA compliance by group health plans (and issuers of health insurance coverage offered in connection with such plans) to comport with the every-two-year requirement under the Consolidated Appropriations Act, 2021 amendments to MHPAEA that require the Secretaries of Labor, Treasury, and HHS to periodically report to Congress on the results of Nonquantitative Treatment Limitations’ comparative analyses reviews conducted by the Secretaries. DOL, 2024 MHPAEA Report to Congress.
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