One of the advantages of corporations or LLC's is that company liability does not reach the personal assets of the owners and usually stays within the "corporate veil". However ERISA laws disregard this when it comes to management of employee retirement plans. The fiduciary duty held by business owners, in the the eyes of ERISA, is transferable to them personally! What makes this risk even more onerous is that even if the business falls on hard financial times and has to go bankrupt, the financial integrity of the retirement plan falls on the owners.
This can be summed up in the following passage from the ERISA law: "any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this title shall be personally liable to make good to such plan any losses to the plan resulting from each such breach...."
So what does a business owner need to do to risk manage this ?
First is to hire a third party professional to help with the administration of your retirement plans. This doesn't take the liability away but it is a good risk management step to reduce it.
Secondly, buy a Fiduciary Liability policy. Transferring your risk to an insurance policy is a sure fire way to help you sleep at night. Also the underwriting requirements to write the policy will be a solid guideline for best practices of retirement plan management.
If you are surprised to find this out from reading this post, you are one of the majority of business owners who do not realize the personal exposure they have with their company retirement plans.
Talk with your legal and insurance professionals today about Fiduciary Liability. Good retirement plan management is critical to the "well being" of your pocket book.
Until next time be careful out there and know your risks.
Posted by: G. Kevin Nemith CIC. CRM President, Agency Leader for CNC Insurance & Pfister Insurance. Hilb Mid-Atlantic Group.
knemith@hilbgroup.com
Top 20 insurance brokers and risk managers in the USA.
Give me your comments or contact me. You can also subscribe to this blog at the above link
remote team todo list, I think this is an informative post and it is very useful and knowledgeable. therefore, I would like to thank you for the efforts you have made in writing this article.
ReplyDeleteI'm glad I found the web site, I couldn't find any knowledge on this m prior to.Also operate a site and if you are ever interested in doing some visitor writing for me if possible feel free to let me know, i m always look for people to check out my web site.
ReplyDeleteremote team task management