Are You Meeting Your Fiduciary Duties?

A Retirement Plan Sponsor Checklist for Charlotte Business Owners

Offering a retirement plan, such as a 401(k), is a significant commitment you make to your Charlotte employees – one that helps them build a more secure financial future. It’s a valuable benefit. But sponsoring an employee retirement plan comes with serious legal responsibilities. Under the Employee Retirement Income Security Act of 1974 (ERISA), sponsoring a plan automatically makes you (and potentially other key individuals in your company) a plan fiduciary.

Many well-intentioned business owners are unaware of the full scope of these fiduciary duties or lack the documented processes to demonstrate they are meeting them. This knowledge gap can inadvertently lead to compliance breaches, opening the door to potential personal liability, costly Department of Labor (DOL) audits, participant lawsuits, and significant penalties.

Understanding and diligently fulfilling your fiduciary responsibilities is crucial. This checklist highlights key areas every Charlotte business owner sponsoring a retirement plan should regularly review, and explores how expert support can help ensure compliance and prudent plan management.

What Does It Mean to Be a Plan Fiduciary?

Under ERISA, you are generally considered a fiduciary if you exercise any discretionary control or authority over the management of the retirement plan or its assets. This often includes the business owner(s), company officers, and members of any designated retirement plan committee.

As a fiduciary, you must adhere to strict standards of conduct:

• Act Solely in the Interest of Participants: Your decisions must prioritize the financial well-being of plan participants and their beneficiaries.
• Act for the Exclusive Purpose: Plan activities must be for the sole purpose of providing benefits to participants and defraying reasonable plan expenses.
• Act Prudently: You must act with the care, skill, prudence, and diligence that a knowledgeable person acting in a similar capacity would use (often called the “Prudent Man Rule”).
• Diversify Investments: Ensure the plan’s investment options are sufficiently diversified to minimize the risk of large losses.
• Follow Plan Documents: Operate the plan strictly in accordance with its written terms, unless inconsistent with ERISA.

Crucially, fiduciaries can be held personally liable for breaches of these duties.

Key Fiduciary Responsibility Areas: A Checklist for Charlotte Plan Sponsors

Use this checklist as a starting point to assess whether you have prudent processes in place for managing your company’s retirement plan:

Plan Governance & Documentation

• Do you have an updated, compliant plan document, and are all plan operations strictly following its terms?
• Is there a documented process for making fiduciary-level decisions (e.g., regular committee meetings with recorded minutes)?
• Have all individuals acting as plan fiduciaries been clearly identified, and do they understand their specific roles and responsibilities?
• Have you considered or implemented Fiduciary Liability Insurance to help protect against potential claims?

Investment Selection & Monitoring

• Have you established a formal Investment Policy Statement (IPS) outlining the process and criteria for selecting and monitoring plan investments?
• Do you have a documented, prudent process for selecting the investment options offered in the plan?
• Are the plan’s investment options regularly monitored for performance, expenses, style consistency, and ongoing suitability based on the criteria in the IPS? Is this monitoring process documented?
• Are all plan fees (e.g., investment fund expenses, recordkeeping fees, advisory fees, TPA fees) clearly understood, documented, benchmarked periodically, and deemed reasonable for the level and quality of services provided?

Participant Communication & Education

• Are participants receiving all legally required notices and disclosures (e.g., Summary Plan Description (SPD), 404(a)(5) participant fee disclosures, QDIA notices) accurately and within the mandated timeframes?
• Are you providing participants with sufficient information or access to resources to help them understand their benefits and make informed decisions about their investments? (Remember the distinction between providing education and providing specific investment advice).

Plan Administration & Operations

• Are employee contributions being deducted correctly and remitted to the plan trust on a timely basis according to DOL regulations?
• Are core plan operations like enrollment, eligibility tracking, contribution processing, distributions, and loans handled accurately and consistently according to the plan document and applicable laws?
• Do you have a prudent process for selecting and monitoring your plan’s service providers (e.g., Recordkeeper, Third-Party Administrator (TPA), Financial Advisor, Auditor)?

The Burden of Responsibility & The Value of Support

Reviewing this checklist makes it clear: fulfilling fiduciary duties requires significant time, specialized knowledge, and meticulous documentation – resources many busy Charlotte business owners may not have readily available internally. The complexity is real, and the consequences of non-compliance (personal liability, costly audits, potential lawsuits) can be severe.

How Portus Wealth Advisors Provides Fiduciary Support

Recognizing these challenges, Portus Wealth Advisors offers specialized guidance and support to help Charlotte plan sponsors manage their fiduciary responsibilities effectively. While you, the business owner, ultimately retain fiduciary responsibility, partnering with knowledgeable advisors can significantly lighten the load and mitigate risk. We can assist by:

• Providing Fiduciary Guidance: Acting as an advisor to the plan, potentially serving as a co-fiduciary for investment selection and monitoring (e.g., under ERISA Section 3(21) or 3(38), depending on the service agreement), bringing expertise to your decision-making process.
• Developing Prudent Processes: Helping establish and document key governance items, such as creating a formal Investment Policy Statement (IPS).
• Assisting with Investments: Providing analysis and recommendations for selecting and monitoring plan investment options aligned with the IPS.
• Benchmarking Fees: Helping you evaluate whether plan fees are reasonable compared to industry standards for the services received.
• Supporting Participant Education: Offering resources or conducting informational sessions to help your employees better understand and utilize their retirement plan benefits.
• Coordinating Service Providers: Facilitating communication and ensuring alignment between your recordkeeper, TPA, and other plan partners.

Our goal is to empower you to confidently manage your fiduciary role through structured processes and expert support.

Manage Your Plan with Prudence and Process

Sponsoring a retirement plan is a commendable way to support your employees’ financial future, but it comes with significant legal responsibilities for you as a Charlotte business owner. Ignoring or misunderstanding your fiduciary duties under ERISA is not a viable option.

By proactively understanding your obligations, implementing documented, prudent processes (using checklists like this as a guide), and leveraging expert support where needed, you can effectively manage your fiduciary role, mitigate personal liability, and ensure your plan truly serves the best interests of your participants.

Feeling overwhelmed by your retirement plan sponsor duties or unsure if you have the right processes in place?

Contact Portus Wealth Advisors today. Let’s discuss how our specialized support for business retirement plans can help you meet your fiduciary obligations with confidence and clarity.

Call Us: 704-936-0084