A person who actually exercises control of the plan’s management, but is not authorized to do so, is a fiduciary.
An employer that sponsors a qualified retirement plan is a fiduciary as a result of its role as settlor of the trust.
When plan assets are invested in contracts issued by an insurance company, the insurance company becomes a fiduciary since it manages the assets that provide the benefits under the plan.
If a plan does not specify a named fiduciary, it must provide a procedure for identifying a named fiduciary.
An investment manager includes any person who acts in a fiduciary capacity with respect to plan assets.
A person may serve in more than one fiduciary capacity in a plan.
A plan must identify the persons with authority to amend the plan.
An investment policy statement must be adopted to provide instructions to the fiduciaries regarding the investment of plan assets.
If a trustee discovers a breach of fiduciary liability by a co-fiduciary, the best course of action is to resign as trustee.
A plan, a fiduciary or an employer may purchase insurance to cover liability or losses by reason of a fiduciary breach.
All of the following individuals are fiduciaries with respect to a plan, EXCEPT:
A. An individual who exercises discretionary authority over the plan’s participant loan program.
B. An individual who exercises control over the purchase and sale of plan assets.
C. An individual who provides investment advice for a fee with respect to plan funds.
D. An individual who prepares audited financial statements of the plan assets.
E. An individual who determines which participants are eligible to receive benefits and authorizes the payment of such benefits.
All of the following statements regarding fiduciary liability are TRUE, EXCEPT:
A. Any agreement containing exculpatory provisions that attempt to relieve a fiduciary from liability is void under ERISA.
B. A fiduciary that approves a limitation of liability clause in a service provider contract is personally liable for any losses that exceed the liability limitations.
C. A plan may purchase insurance that will reimburse the plan for any losses suffered as a result of a fiduciary breach.
D. An employer or other party may indemnify a fiduciary, provided the fiduciary remains responsible for any breaches committed as a fiduciary.
E. A fiduciary may purchase liability insurance with his or her own funds.
All of the following are fiduciary functions, EXCEPT:
A. Determining eligibility for the plan
B. Reviewing claims for plan benefits
C. Paying PBGC premiums
D. Maintaining plan records according to ERISA requirements
E. Hiring an investment manager
All of the following statements regarding consequences of fiduciary breaches are TRUE, EXCEPT:
A. Fiduciaries must restore losses incurred by the plan due to a failure to diversify investments.
B. A fiduciary will not be held liable for a breach made by the investment manager.
C. A fiduciary’s account balance in the plan may be used to offset damages to the plan if necessary.
D. A fiduciary may be required to pay any profits earned in a breach to the plan.
E. Fiduciaries must restore losses incurred by the plan due to mismanagement of the plan.
All of the following factors should be considered when choosing a service provider, EXCEPT:
A. Fees charged for services to be performed
B. Qualifications of the service provider
C. Quality of the services to be performed
D. Litigation or enforcement action taken against the service provider
E. Design of the service provider’s office
