Fiduciary Responsibilities Under ERISA: Why Annual Training and Consulting Matter

Under the Employee Retirement Income Security Act (ERISA), Section 404(c) offers retirement plan sponsors a crucial safe harbor—but only if they meet the necessary requirements. This protection shields fiduciaries from liability for investment outcomes as long as plan participants are given sufficient control and information over their investment choices.

Many plans claim 404(c) protections, yet few can actually demonstrate ongoing compliance with the required standards. This gap exposes fiduciaries to risk, making annual fiduciary training and consulting essential for compliance and peace of mind.

Why annual fiduciary training is critical for plan sponsors

Annual training isn’t just a best practice; it’s a requirement.

Key takeaways:

• Plan fiduciaries must document annual fiduciary training (meeting minutes or certifications).
• 404(c) protections require ongoing proof of compliance; they are not an evergreen arrangement just because the plan document states the intention to comply.
• Implementation and documentation of a prudent process is the strongest defense against audits, IRS actions, or lawsuits.

Understanding ERISA fiduciary responsibilities for plan sponsors

Understanding fiduciary responsibilities under ERISA is critical for plan sponsors and retirement plan fiduciaries. The Department of Labor (DOL) requires fiduciaries to meet these obligations continuously, not just at plan setup, to avoid compliance risks and potential liability.

Plan fiduciaries have several key duties under ERISA, including:

Duty of loyalty (Exclusive Benefit Rule): Fiduciaries must act solely in the exclusive best interest of plan participants and beneficiaries, avoiding conflicts of interest and prioritizing participant outcomes.

Duty of prudence: Under ERISA, fiduciaries must select investments and oversee the plan with the care, skill, and the diligence of a “prudent expert,” ensuring decisions align with regulatory and industry best practices.

Duty of compliance: Plans must operate according to governing plan documents and ERISA regulations, including timely disclosures and adherence to DOL guidelines.

Duty to offer diversification: Fiduciaries must provide an investment lineup that allows participants to diversify and manage risk effectively.

Demonstrating 404(c) compliance: Why annual documentation matters

ERISA 404(c) protections are not evergreen, and compliance isn’t a “set it and forget it” process. Safe harbor protections apply only if plan sponsors document and maintain compliance every year the plan is active.

To qualify, fiduciaries must affirmatively demonstrate intent to comply with 404(c), and follow DOL regulations. Annual fiduciary training and proper documentation are key.

Without this proof, plan sponsors risk losing safe harbor protections and facing significant liability for investment losses—especially in the event of a DOL or IRS audit, or even worse, participant lawsuits.

Help your plan meet 404(c) requirements with Investment and Fiduciary Consulting services by Newport, an Ascensus company.

How fiduciary consultants support annual training and ERISA compliance

Fiduciary consultants offer specialized ERISA compliance support that goes far beyond routine plan management. By partnering with an expert, plan sponsors can reduce fiduciary risk, maintain 404(c) protections, and stay audit-ready year after year—all while streamlining documentation and training processes.

Annual fiduciary education and certification

Consultants deliver annual fiduciary training to keep sponsors current on ERISA regulations and relevant case law. They also provide certification processes confirming compliance with 404(c) requirements and maintain annual documentation for due diligence.

Plan design and disclosure reviews

Independent assessments determine whether the plan offers a broad and diversified menu of investments and whether participants have meaningful control over their investment decisions. These reviews can also ensure the plan meets DOL disclosures standards for fees, investment risk, and performance transparency.

Documentation and recordkeeping

Proper documentation is critical for compliance; in the eyes of the DOL, “If it’s not documented, it didn’t happen.” Consultants help create and maintain detailed compliance records, such as annual training logs, meeting minutes, and participant communication audits, which can be plan sponsors’ strongest defense in audits or litigation.

Correcting misconceptions about evergreen compliance

Compliance with 404(c) is not evergreen, so consultants implement structured compliance calendars and annual certification processes into the plan’s operational rhythm to ensure ongoing adherence and prevent costly oversights.

Litigation and audit readiness

Whether it's a DOL audit, IRS review, or participant lawsuit, the moment of truth for any fiduciary is whether they can prove their compliance history. Implementation and documentation of a prudent oversight process for all investment and non-investment related fiduciary responsibilities is everything, and fiduciary consultants ensure that you have complete compliance records to respond confidently.

Key takeaway: ERISA 404(c) offers powerful safe harbor protections, but only if compliance is documented annually. Most plans claim 404(c) protections, but the burden of proof lies squarely on the plan sponsor, and few can actually prove they meet the standards annually. Fiduciary consultants close this critical gap, reducing risk and confirming ongoing compliance.

How Newport’s fiduciary consulting services help plan sponsors stay compliant

Newport, an Ascensus company, provides investment and fiduciary consulting services that help plan sponsors meet ERISA obligations and reduce compliance risk. As an independent firm with no ties with investment managers or mutual fund companies, we deliver unbiased recommendations free from any potential conflicts of interest. Our services help support plans working with or without a financial advisor. Our team of investment and fiduciary governance professionals offer customized solutions and we provide fiduciary services designed to meet your specific needs, including:

• Full documentation of a prudent oversight process with a detailed Investment Policy Statement (IPS) and Fiduciary Practices Statement (FPS) for investment and non-investment related responsibilities, respectively
• Annual fiduciary education and certification to maintain 404(c) compliance
• Plan fee benchmarking to ensure expenses are reasonable and customary
• ERISA 3(21) investment consulting and ERISA 3(38) discretionary investment management for investment related decision-making
• Fiduciary Governance Advice for non-investment related oversight
• Risk mitigation strategies to limit fiduciary responsibilities and liabilities
• Ongoing compliance support for all ERISA requirements

Ready to strengthen your fiduciary compliance? Contact Newport’s Investment and Fiduciary Consulting Services Practice to learn how we can help you manage your retirement plan and associated fiduciary responsibilities.