Serving as a fiduciary for an employee benefit plan carries important responsibilities under the Employee Retirement Income Security Act of 1974, as amended (ERISA). In broad terms, ERISA protects participants and beneficiaries through required disclosures, enforceable standards of conduct and remedies when those standards are not met.

Fiduciary status is based on function, not title. A person can become a fiduciary by exercising discretion over plan management or administration, controlling plan assets or providing investment advice for a fee. The strongest defense is a consistent, well-documented process. The five practices below can help.

1) Confirm fiduciary roles and define who does what

Clarify where fiduciary responsibility sits within the organization and how it is documented. ERISA recognizes both appointed fiduciaries (e.g., named fiduciary, plan administrator and trustee) and functional fiduciaries based on conduct. Clear role definitions help reduce gaps and avoid unintended liability.

  • Document appointments and delegations: verify the plan document (and committee charter, if used) assigns responsibilities.
  • Train decision-makers: confirm anyone with discretion understands what constitutes a fiduciary act.
  • Oversee service providers: vendors can perform tasks, but fiduciaries remain responsible for selection and monitoring.

2) Put participants interests first and manage conflicts proactively

ERISA's duty of loyalty requires fiduciaries to act solely in participants' and beneficiaries' interests and to pay only reasonable plan expenses. In practice, that means identifying and managing conflicts before they shape decisions.

  • Use a conflict-of-interest process: collect disclosures, document recusals and keep decisions participant-focused.
  • Be alert to "soft" conflicts: vendor relationships, referral arrangements, proprietary investments, gifts/entertainment or decisions that benefit the employer at participants' expense.
  • Flag prohibited-transaction risk early: ERISA restricts certain dealings with related parties; involve counsel when uncertain.

Consejo: Document the rationale for each decision, including services, outcomes, fees and participant needs, so the record shows the decision was made for plan-related reasons.

3) Follow a prudent, repeatable decision-making process and document it

ERISA's duty of prudence centers on process. Fiduciaries should act with the care, skill and diligence that a prudent person would use in a similar role and under similar circumstances. Perfection is not required. A thoughtful, informed and repeatable approach is.

  • Set a cadence: use a committee calendar with standing agenda items (e.g., investments, fees, operations, participant outcomes and vendors).
  • Use relevant data: evaluate the decision, available alternatives, associated risks and participant impact.
  • Capture the "why": meeting minutes should reflect key inputs, discussion and rationale.

4) Align actions to plan terms and confirm vendors can administer them

Fiduciaries must follow plan terms unless those terms are inconsistent with ERISA. Common operational risk areas include missed deadlines, incorrect eligibility determinations, inaccurate match calculations and improper distributions. Strong controls and vendor oversight help prevent errors and support timely correction when issues arise.

  • Maintain an admin "playbook": a plain-language guide for key provisions (e.g., eligibility, match, vesting, loans, distributions, special features).
  • Confirm vendor controls: recordkeepers should administer provisions correctly and flag exceptions.
  • Test and remediate: use audit or exception reports, document corrective actions and outline steps to help prevent recurrence.

5) Strengthen investment and fee oversight (diversification, monitoring and reasonableness)

For participant-directed plans, fiduciaries generally focus on offering a diversified investment menu, selecting and monitoring options and confirming that fees paid from plan assets are reasonable for the services provided

Investment oversight:

  • Use an investment policy statement or guidelines: define evaluation criteria, watch lists and replacement triggers.
  • Monitor and act: review performance, fees and qualitative changes; document retain/watch/replace decisions.
  • Support diversification: offer options across risk/return profiles and a prudent default where applicable.

Fee oversight:

  • Review fees periodically: compare recordkeeping, investment and advisory fees to services and plan complexity.
  • Use disclosures as inputs: review provider disclosures and be able to explain what is paid and why.
  • Document the rationale: "Reasonable" does not always mean "lowest cost," so the tradeoffs should be clearly documented.

ERISA fiduciary work requires disciplined stewardship. By acting in participants' interests, following plan terms and using a prudent, repeatable and well-documented process, fiduciaries can strengthen governance, improve outcomes and reduce fiduciary risk.

If you’d like to put these recommendations into action for your plan, please contact your PNC Institutional Asset Management representative to continue the conversation.