The Employee Retirement Income Security Act of 1974 protects your retirement plan from abuse, fraud and mismanagement.
Under ERISA, the people who manage your retirement plan have certain duties, including fiduciary responsibility. If you have a retirement account, you should understand what this means.
Who are fiduciaries and what are their responsibilities?
According to the U.S. Department of Labor, fiduciaries are the people or entities who are responsible for managing your retirement plan or providing investment advice for the plan. Fiduciaries may include trustees, administrators and committee members.
The responsibilities of fiduciaries include:
- Making responsible investment decisions
- Diversifying investments to minimize the risk of a major financial loss
- Avoiding conflicts of interest
- Following the terms of the plan
Fiduciaries have an obligation to act in your best interest when making decisions about your retirement plan. They must make decisions that benefit you, not themselves or third parties.
How can you identify a breach of fiduciary duties?
Many people do not fully understand how retirement accounts and investments work. This can make ERISA violations difficult to spot. However, there are some telltale signs that your employer may be misusing your retirement account contributions.
Lack of transparency is a major warning sign. You should receive regular account statements. If statements arrive late or inconsistently, this may indicate mismanagement. When you receive your account statement, check it carefully for accuracy. Missing contributions, unusual transactions or an inaccurate balance are all causes for concern.
Your retirement account is an investment in your future. ERISA exists to safeguard it from abuse. If you believe your employer is violating ERISA, you may have legal recourse.