Are government plans subject to fiduciary liability arising out of Y2K

[Guest Sara]

It is my understanding that fiduciary liability for Y2K problems applies to ERISA plans. Is there a counterpart which subjects government plans to Y2K fiduciary liability? Thanks!

[Guest CVCalhoun]

The only federal fiduciary standards to which governmental plans are subject are contained in Internal Revenue Code sections 401(a)(2) and 503(B). Those sections speak of using plan assets solely in the interests of plan participants and beneficiaries, and have been held to impose fiduciary standards as well as self-dealing rules.

However, the main source for fiduciary rules for governmental plans is state law, including state constitutional provisions. Because governmental plans are not covered by the provisions of ERISA which preempt state law as to private plans, they are subject to a wide variety of fiduciary regulation by applicable state law.

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Employee benefits legal resource site

[Guest PeterGulia]

The government plan sponsor may want the Attorney General's advice on whether the plan fiduciaries are protected by sovereign immunity.

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