Why are plan sponsors ERISA fiduciaries to their 401(k) plans, especially when it comes to the selection and monitoring of investment vehicles?
I know that is how ERISA and the current regulations are written. My question is why from a policy perspective this hasn't been changed?
I think employers fiduciary status in these situations is an anachronism attributable to the fact that 401(k) plans did not exist when ERISA was enacted and the fiduciary definition has not been appropriately updated to reflect the new reality.
It is not sensible to expect employers to be experts on the ever changing world of investment products, especially in a system where benefit plan sponsorship is voluntary. And, it really is not sensible to let many of the individuals and entities who provide advice to employers about investment selection and monitoring off the 'fiduciary' hook when we leave employers dangling on that hook. I'm not sure why employers and the employer organizations involved in benefits policy haven't supported the DOL's attempts to rationalize the definition of ERISA fiduciaries. It seems to me that it would be in employers' interests, both in the short and long term, to have their advisers held to fiduciary standards. Anyone have any answers?
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