Resignation of Plan trustee

[billfgrady]

Is there a requirement as to how much notice a trustee must give an employer when resigning as trustee? Although the standard Sungard Corbel language allows for some flexibility here--"Unless otherwise agreed to by both the Trustee and the Employer, a Trustee may resign at any time by delivering to the Employer, at least thirty (30) days before its effective date, a written notice of resignation."--I'm wondering if there is a regulation or other source speaking to this issue. Assuming there is not, we should be able to permit a trustee to resign effective immediately upon delivery of a written notice to the employer. Thoughts?

[KJohnson]

I think that there is some older case law to support the notion that before a Trustee can resign it must make sure that there has been "adequate provision" for the continued prudent management of assets. I am not sure how this argument has faired more recently. See

Chambers Kaleidoscope Inc. Profit Sharing Plan and Trust, 650 F.Supp. 359, 369 (N.D. Ga. 1986); Freund v. Marshall & Isley Bank, 485 F.Supp. 629, 635 (W.D. Wis. 1979).

[Guest eafredel]

I do not believe there is a regulation that directly addresses the issue of the time period required for the resignation of a trustee. In practice, I think thirty days is sufficient in cases involving plans with multiple individual trustees. In cases involving institutional trustees, it often takes much longer. Certainly, in some cases, there is plenty of case law that states that a trustee should resign (or arrange for the appointment of an independent fiduciary) if faced with a conflict of interest.

The limited case law that exists that deals with time period simply states that the provisions of the plan or trust agreement must be followed in cases involving the resignation of a trustee or other fiduciary. I am not aware of any case law in the ERISA area that suggests that a particular time period is too short, where an adequate successor trustee is appointed.

There also is more recent case law that addresses the situation where the plan or trust agreement is silent. Ream v. Frey, 107 F. 3d 147. In this case, a fiduciary resigned knowing that the employer had failed to remit contributions on a timely basis, but after making repeated attempts to get the employer to name a successor.