The Employee Benefits Security Administration has issued a bulletin that talks about the fiduciary responsibilities of certain companies that help with retirement plan administration.[@@]
The companies, “directed trustees,” are banks, trust companies or other companies that handle tasks such as buying stock for the employer that sponsors a plan and other plan fiduciaries.
Directed trustees have only a limited role in protecting plan participants against bad fiduciary decisions, according to Robert Doyle, EBSA’s director of regulations and interpretations.
When, for example, the directed trustee has the same information that every other investor has about a publicly traded stock, the trustee’s obligation to question transactions based on prudence grounds is limited, Doyle writes in EBSA Field Assistance Bulletin Number 2004-03.
But a directed trustee might have an obligation to check with the fiduciaries if, for example, the fiduciaries had asked the directed trustee to buy stock in a company that had just filed for bankruptcy, Doyle writes in the bulletin.