ERISA requires every plan to have at least one named fiduciary with authority to manage the plan. In a corporate setting, the employer is usually the plan sponsor which makes them the plan fiduciary. The named fiduciary is typically an individual employed by the plan sponsor and given the ultimate responsibility for oversight of the plan. Also, the employer is oftentimes the plan administrator and/or trustee. The plan administrator and the trustees are automatic fiduciaries by the nature of their positions.
Fiduciaries of a benefit plan have certain legal obligations to employees who participate in a plan. The fiduciaries must act solely in the interests of participants and beneficiaries, for the purpose of providing benefits and paying reasonable plan expenses. Fiduciaries must perform their functions in a prudent and vigilant manner and must comply with any written documents that govern the plan.
The plan document governs the operation and administration of the plan. The named fiduciary and the plan administrator must understand the various details of the plan in order to ensure that the plan is operated in accordance with the plan document.
Plan sponsors often believe that once they have contracted with a trustee or custodian or third party administrator for plan management and recordkeeping that their obligations are satisfied. Regardless of the contracts with service providers, the plan sponsor is still the plan fiduciary and must maintain sufficient documentation to support the transactions that have occurred in the plan. Therefore, the plan sponsor should be able to answer questions and provide support and documentation to assist the auditor throughout an audit engagement.