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Department of Labor posts new rules for ERISA plan fiduciaries

| Feb 5, 2021 | ERISA

The Department of Labor recently revised regulations regarding provisions concerning ERISA plan fiduciaries. These new guidelines revolve around shareholder rights such as proxy voting. The new rules impact New Jersey’s economic and pecuniary systems.

ERISA Protections

The Employee Retirement Income Security Act (ERISA) falls under federal tax law. It regulates protections for retirement plan assets. The new regulations cover all persons and entities authorized to manage these plans.

What or who is a fiduciary?

A fiduciary is a person or entity placed in a position of trust to manage the financial affairs of another. This generally involves prudently caring for money and other assets. The fiduciary might be the trust department of a bank, a corporate trust company or even a private individual. Since the party placing this confidence in a fiduciary is in a vulnerable position, both the laws and good conscience require that the fiduciary act in the best interests of that party at all times.

Contents of the new rule

The initiative of the Department of Labor’s new edict sets forth a number of obligations that a fiduciary must adhere to. They revolve around management of proxy vote records and the exercise of shareholder rights. The law requires the fiduciary to act solely in accordance with the plan and the economic interests of the participants and to exercise prudence and diligence when performing proxy advisor and other services.

Breaches in fiduciary duty

If a fiduciary is in breach of these obligations, under ERISA, liability can fall directly on that fiduciary. Repairing any damage to the plan and restoring it to its original state is the fiduciary’s direct responsibility. This includes returning profits and restoring monetary losses. If you’re a fiduciary who wants to know how the Department of Labor’s changes may affect you, contact an attorney familiar with ERISA and fiduciary law. These issues can be complex, and consulting legal counsel is the wisest course to follow.