Trustee Liability

[Guest wwest]

A third party plan trustee gives erroneous information to a plan participant about the timing of a transaction. The error resulted in a loss of thousands of dollars because the stock market took a nose dive. The trust agreement only addresses the trustee to act with care, skill, prudence and diligence of a prudent person in a like capacity. The SPD states the correct timing of the transaction -- contrary to the information the trustee gave. What authority to address this issue? Who is liable to the Participant, if anybody.

[Guest Les Revzon]

Normally the Plan Administrator is responsible for gathering employee investment change elections and transmitting them to the Trustee. Under this arrangement the Plan Administrator would be held accountable if he/she gave out incorrect information.

However, if I understand your question correctly, the participant contacted the trustee directly and was given incorrect cut-off times to submit investment changes. If this is a correct understanding then I would strongly urge the participant (through the Plan Administrator or Sponsor) to have the Trustee make his account whole. I know the wording you refer to in the Trust Agreement but there is also wording about neglience.