Authorized person on investment account

[Basically]

Simple investment question.... 

401(k) plan with maybe 20 participants.  The investments are held with an RIA... individual investment accounts.  The 2 trustees are not always available to sign the LOA to pay out a participant.  Can someone at the business other than a trustee be listed on the investment to sign these LOAs to pay out a participant?

[Peter Gulia]

Whether

the person that has power to elect or appoint the retirement plan’s trustees may add another cotrustee, or

the trustees may authorize an agent to act for the trustees, or

the plan’s governing documents might put a distribution-approving function in the plan’s administrator’s responsibility, and the administrator might authorize people to act;

turns on the preferences of the plan sponsor (which might, if needed, become expressed in an amendment of one or more of the plan’s governing documents), and, if the administrator is a distinct person, the plan’s administrator,

but subject to the custodian’s agreement.

A human who gets a power to instruct a custodian to pay a distribution is a fiduciary.

A trustee, administrator, or other fiduciary must not appoint to, or tolerate in, a distribution-instructing role a human who has been convicted of a disqualifying crime. ERISA § 411, 29 U.S.C. § 1111 https://www.govinfo.gov/content/pkg/USCODE-2024-title29/html/USCODE-2024-title29-chap18-subchapI-subtitleB-part4-sec1111.htm.

A distribution-approving person must be covered by ERISA § 412 fidelity-bond insurance.

Consider also that a distribution-approving fiduciary is a cofiduciary of all other fiduciaries and might in some circumstances have fiduciary responsibility regarding another fiduciary’s breach.

A decision-maker might consider whether not making it too easy to instruct a distribution might be a useful and prudent control.

This is not advice to anyone.