Understanding Fiduciary Responsibilities Relating to Retirement Plans By: Angela Johnson, CPA Date: 9/10/09 The panic caused by last year's stock market fallout has lead to a lot of finger-pointing especially in the retirement plan arena.  This is the kind of finger-pointing that is expensive and often ends up in court.  More so than ever before, sponsors of retirement plans are being sued.  Such lawsuits relate to anything from underperforming investments being offered in the plan, to fees that are considered excessive by plan participants.  At the heart of these lawsuits is the assumption that plan fiduciaries aren't doing their jobs.  To cope in this new environment, plan trustees and administrators need to be informed and active in the management of the plan they are overseeing.  Such oversight responsibilities are extensive since the plan participants cannot look over invoices for fees charged to the plan, select the investment options allowed by the plan, or monitor the activity in the plan.  Consequently, as these critical duties are delegated to the plan administrator or trustee, they bear a heavy responsibility when it comes to overseeing a company's retirement plan.  When these duties are handled improperly, especially with a stock market in a downturn, litigation is increasingly likely.   The good news is that courts are deciding in favor of plan sponsors where sponsors can demonstrate that they were making reasonable efforts and decisions that were in the plan's best interest.  Such efforts include making sure that fees charged to the plan are appropriate, plan failures are fully corrected, and expert legal advice is obtained when needed.  In summary, courts are looking to see that plan fiduciaries held to their legal responsibility to act on behalf of the plan participants as prudent advocates.  On the other hand, when a decision is made based on the best interest of the employer, or where the fiduciary's duties have been breached, then he or she can be subject to a lawsuit, as well as the plan sponsor, and both may be held accountable.  In a litigation and regulatory environment like we have today, this can be a very costly mistake.