If you sit on your company’s retirement plan committee, you play a critical role in helping employees save for the future. But with that role comes legal responsibilities under the Employee Retirement Income Security Act (ERISA). These responsibilities make you a fiduciary, which means you must always act in the best interests of plan participants. Understanding what that means—and what’s at stake—is essential.
What Is a Fiduciary?
A fiduciary is responsible for making decisions about the retirement plan and its investments. ERISA sets strict standards for fiduciaries to ensure that retirement plans are managed properly.
If fiduciaries fail to meet these responsibilities, the consequences can be serious. In 2024 alone, the U.S. Department of Labor (DOL) recovered nearly $1.4 billion for retirement plans and participants due to fiduciary violations. Of that, $741.9 million came from enforcement actions against plan fiduciaries who failed to uphold their duties.[1] The risks are real, which is why every committee member should understand their role.
Are You a Fiduciary?
If you sit on your company’s retirement plan committee, there’s a good chance you are a fiduciary. Ask yourself these questions:
Are you named in the plan documents as a fiduciary?
Do you make decisions about plan management, administration, or investments?
Do you provide ongoing investment advice or select investment options for the plan?
Do you select or oversee other plan fiduciaries, like investment advisors or third-party administrators?
Do you sit on a committee that makes plan-related decisions?
If you answered yes to any of these questions, you have fiduciary responsibilities under ERISA.
Understanding Your Fiduciary Duties
Fiduciary responsibilities aren’t just guidelines—they’re legal requirements. ERISA outlines four key duties that every fiduciary must follow:
Duty of Loyalty | You must act solely in the best interest of plan participants and their beneficiaries. That means avoiding conflicts of interest and making decisions that benefit employees, not the company or individual committee members.
Duty of Prudence | You are expected to make decisions with the care, skill, and diligence of a knowledgeable professional. Even if you’re not an investment expert, you’re responsible for hiring qualified professionals to assist with managing the plan.
Duty of Diversification |Plan investments should be diversified to help reduce risk. If the plan offers too few investment options or concentrates too much on one area, fiduciaries could be held responsible for failing to minimize risk.
Duty to Follow Plan Documents | Fiduciaries must follow the plan’s governing documents if they align with ERISA rules. Ignoring or failing to understand the plan’s guidelines can lead to compliance issues and potential penalties.
What Happens If a Fiduciary Fails?
Fiduciary breaches can result in:
Personal liability for plan losses
Government investigations and audits
Fines and penalties
Lawsuits from plan participants
That’s why plan committees should have processes in place to monitor investments, document decisions, and review service providers regularly.
Tips to Protect Yourself and the Plan
Document Everything – Keep records of committee meetings, decisions, and the reasoning behind those decisions.
Review Fees and Investments Regularly – Make sure plan fees are reasonable, and investment options remain appropriate.
Stay Educated – Fiduciary training can help committee members stay informed about their responsibilities.
Work with Plan Specialists – If you don’t have investment expertise, work with a qualified advisor or consultant.
How Spectrum Can Help
Serving on a retirement plan committee is a critical responsibility, and fiduciary duties should not be taken lightly. Understanding ERISA’s rules and fulfilling your obligations can help protect employees’ retirement savings—while also reducing legal risks. If you’re unsure whether your committee is meeting its fiduciary obligations, now is the time to review your processes and seek guidance.
Spectrum Investment Advisors offers comprehensive retirement plan consulting to help you stay compliant and support your employees on their financial journeys:
Strategic Plan Management – Plan design consulting, provider benchmarking, and technical support.
Fiduciary Governance – Fiduciary training, compliance reviews, and expense analysis.
Investment Monitoring – Fund selection, performance reviews, and independent investment advice.
Employee Engagement – Targeted education, one-on-one guidance, and financial wellness programs.
Spectrum provides guidance on managing your retirement plan through a structured process that supports compliance, investment oversight, and employee engagement.