401k Trustee

[Guest pon66]

I have been asked to be a Trustee for my employer's 401 k plan. There are 50 participants. A new administrator/investment advisor are taking over our existing plan that had previosly been through a bank's Trust Dept. They are also asking that we obtain fidelity bonds for each trsutee.

What questions do I need to ask concerning the exetent of my liabilities, responsibilities and should I have insurance to protect myself ?

Are the others issues that I/we need to consider ?

[rcline46]

You need to obtain a copy of the trust agreement or trustee section of the new plan document. If your plan is self-directed and a 404© plan (see the document) then there are special limits to your liabilities and responsibilities.

[Kirk Maldonado]

Make the company purchase a fiduciary liability insurance policy on your behalf.

[pmacduff]

While both replys are good, I think we need to "back up" here. I think that there are other questions to be asked first. What position do you hold in the Company? Why are they asking you to serve as a Trustee? What is the Company's history, especially financially? There are responsibilities and liabilities for any Trustee of a Qualified Plan and I think you need to be well aware of all before you make a committment like that.

[Guest pon66]

I'm OK with the issues that you've brought up. (Position and Financial Condition). What I'm really after is : Whether we (the other trustee and I) should take on the risk and responsibility ? If so, what do we need to know. Or whether it is preferred to pass it off to another entity.

[Erik Read]

As the trustee - will you also be the "named fiduciary" in the documents. That is the real question. As a fiduciary you will have unlimited PERSONAL liability for any breach that may occur - under your doing or anyone else's.

I agree that more questions need to be addressed, position with the firm, why your being asked, what type of insurance the employer is going to carry on your behalf and on behalf of the plan, and what decisions they're asking you to make.

Get a copy of the trustee powers in the document to be sure you know what's being asked of you.

DON'T take this lightly - it's a very big undertaking.

[Guest shafter]

If you go back to Benefitslink and enter "Reish fiduciary" in the search box, you will get a presentation C. Frederick Reish presented at an ASPA workshop in October 2000 titled 401(k) Fiduciary Responsibilities.

[Jon Chambers]

Here's a link to an overview of the trustee role, and why you may prefer to have an institutional trustee. FYI, we are consultants, and don't act as trustee, so there is no inherent bias in our opinions.

http://www.advisorsquare.com/advisors/schu...ns/82713136.pdf

[Guest rmeigs]

This is a fairly complex issue for which much has been written. The following link directs you to a page that provides a collection of articles that will give you a pretty good background on the liability issues.

http://www.401khelpcenter.com/fiduciary.html

Rick Meigs

401khelpcenter.com