A recent article by Marcia S. Wagner in Investment News brought to light a district court decision that has implications for how retirement plan sponsors should monitor their adviser.

Employee Retirement Income Security Act of 1974, Section 405(d)(1), provides that if a named fiduciary appoints an investment manager to manage the assets of a plan, then no trustee shall be liable. In the lawsuit, the Department of Labor took a curious position, saying that since the plan administrator and named fiduciaries of the plan were not trustees, they could not take advantage of the safe-harbor relief under ERISA. The District Court for the Western District of Pennsylvania disagreed with the DOL. It concluded that ERISA intended to grant safe-harbor relief to fiduciaries who have been granted control of the assets of a plan and who have properly appointed an investment manager to manage plan assets, even if the named fiduciaries are not designated as trustees.

Click here to read this summary from Investment News

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