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Where to find ESOP plan sponsors discharge of fiduciary duties codified in law/advisory bulletins/LRM/Treas regs?


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Group:

I may not have all necessary research tools

to find the above query at my disposal just yet.

Is there a resource (I'm willing to buy the resource if necessary)

that illustrates when a plan sponsor discharges their duties as a fiduciary?

I'm looking for a number of instances connected with setting up ESOP's, maintaining ESOP's

and winding down/terminating such ESOP's?

 

As example, I note from my reading of DOL Greatbanc (and 2018 Lubbock case)

there are steps a fiduciary takes when choosing a valuation appraiser.

 

Once all the steps are accomplished doesn't the plan sponsor discharge their duty

to participants?

 

Another example is when a fiduciary hires a TPA to perform 5500 filings

and preparation of employee benefit statements (summary of annual reports/SAR's)

is there any legal support to reflect that their duty to provide notices

were delegated to said TPA's and the plan sponsors/trustee's

reliance was reasonable?

 

Reason for my query is I'm dealing with an unhappy TEGE/IRS

auditor (on an ESOP matter) who doesn't like my initial argument

that the plan sponsors/trustees discharge their duties

by hiring experts. ie. valuation experts, TPA's

even the CPA's, Tax/ERISA counsel, etc.

 

I can't find the text/law/support that says the fiduciary discharges

their duty and can not be assessed penalties/taxes/other sanctions.

 

Is there an easy to use searchable database, related

to all things ESOP's, for all DOL advisory bulletins?

IRS LRM's?  Treas Regs?

 

I'm sure there is a treatise out there that I have not run across

just yet and hoping one of my learned colleagues may have already

done some leg work on this matter.

Thank you in advance!

 

 

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As far as I know your expectation is wrong.   it has always been my understanding that a fiduciary can't ever fully delegate their duties.    They always have to monitor and review what the experts do to make sure they do their job right.   I don't think they can just assume a TPA has sent notices for example.   They need to know they were sent in some way.   If it is an internal trustee that is a participant did they get a copy of the notice for example?  

That is a big part of the Greatbanc settlement.   It sets out guidelines, and I have always understood them as a guidelines not a safe harbor, to help trustee's understand if they have discharged their duty in regards to the stock appraisal.  

When you say are there guidelines that say you have discharged their duty and can't be assessed a penalty it sounds like you are looking for some kind of safe harbor rules regarding fiduciary duties.   I think the reason you aren't finding anything is because they don't exist.  

I am happy to have an ERISA attorney, which I am not one, and tell me I am wrong.  

Every attorney I know on this topic says the way to defend yourself in this area is document your procedures and how you followed them.   As long as the procedure was reasonable and they were followed you tend to have a strong defense in this area.  As far as I know you can't just claim you hired professionals.   They have to follow up to make sure the professional did their job. 

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I'm an ERISA attorney, among other things... and ESOP Guy is dead spot on. In essence, one mantra is that you cannot ever delegate completely and a fiduciary always has a duty to oversee. As Harry Truman said, "The buck stops here." An important part of the DOL recent line of ESOP cases is that fiduciaries thought they were delegating but did a fairly obviously inadequate job of overseeing the experts they hired. 

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