9.3 ERISA and Fiduciary Obligations
The Employee Retirement Income Security Act of 1974 (ERISA) governs private-sector employee benefit plans, imposing high standards of fiduciary conduct on plan trustees and investment managers.
Key NASAA Exam Takeaways
- ERISA Section 404(c) shields plan fiduciaries from liability for investment losses if participants are granted control over assets with at least 3 diversified core options.
- Investment Policy Statement (IPS) is the governing document establishing guidelines for portfolio asset allocation, manager selection, and performance benchmarking.
- Prohibited Transactions include self-dealing, receiving kickbacks, or dealing with plan assets for personal benefit.
- Fiduciaries must act solely in the interest of plan participants and beneficiaries with the prudence of a knowledgeable professional.
Knowledge Checkpoint • Section 9.3
Under ERISA Section 404(c), plan sponsors can relieve themselves of fiduciary liability for participant investment losses provided that participants are offered: