ERISA § 3(38) Investment Fiduciary

Delegate the fiduciary responsibility and legal liability for selecting the investment options to a 3(38) investment fiduciary.

Plan sponsors of 401(k) plans are charged with a myriad of legal duties under ERISA. A principal duty is the legal responsibility (and legal liability) to select‚ monitor‚ and (if necessary) replace the investment options.

Even among many well-informed employee benefits attorneys there is a widespread misconception that sponsors cannot delegate their day-to-day administrative and investment fiduciary responsibilities and liabilities to others. This simply is not true. Since the enactment of the Employee Retirement Income Security Act of 1974 (ERISA)‚ plan sponsors have been able to delegate virtually all of their fiduciary responsibilities to others.

The selection‚ monitoring‚ and replacing functions associated with the investment options are at the center of current ERISA litigation. This fact alone should alert plan sponsors to the added protection afforded them when they hire a 3(38) investment fiduciary who assumes‚ in writing‚ the fiduciary responsibility and liability for those functions.

At the end of the day‚ it is the 3(38) investment fiduciary who has sole legal responsibility (and sole legal liability) for making the investment decisions for the plan and removes this burden from the plan sponsor.