<nobr>Aug 25, 2008</nobr>

GAO Warns that Fulfilling Fiduciary Obligations Can Present Challenges for 401(k) Plan Sponsors

The Government Accountability Office recently released a report that says plan sponsors face challenges in fulfilling their obligations when fiduciary roles are not clearly defined or when sponsors lack important information about arrangements between service providers.

The report is based on reviewed industry research, interviews, and the results of a survey GAO conducted with PLANSPONSOR Magazine. GAO warned that fiduciary roles that are not clearly defined can lead to gaps in plan oversight, saying that several industry professionals noted situations when sponsors assumed they had delegated fiduciary investment advice for the selection and monitoring of investment funds to a service provider, but the service provider did not acknowledge that fiduciary role.

GAO does not make any recommendations in this report, but notes that it previously suggested Congress consider changes to ERISA addressing fiduciary roles, such as explicitly requiring 401(k) service providers to disclose to plan sponsors the compensation they receive from other service providers, and providing DOL authority to recover plan losses against certain types of service providers even if they are not currently considered fiduciaries under ERISA.


Websites:

GAO Report on Challenges for 401(k) Plan Sponsors

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