ERISA and Regulatory Requirements
What this domain tests
ERISA and regulatory requirements test fiduciary status and process, reporting and disclosure, prohibited transactions, claims, and the line between ERISA and IRC rules. Scenarios often turn on a vendor arrangement or a participant notice.
Core requirements
- Fiduciary duties: ERISA 404(a)(1) requires loyalty, prudence, diversification, and adherence to plan documents; the process must be documented.
- Named fiduciaries and trustees: 402(a) identifies named fiduciaries; 403 requires a trustee unless an exemption applies.
- Disclosure: 404a-5 requires participant fee disclosures; 408(b)(2) requires service-provider disclosures; SPDs and SMMs must be furnished.
- Prohibited transactions: 406 bars self-dealing and party-in-interest transactions unless an exemption applies.
- Reporting: Form 5500, audits for large plans, and 412 bonding are core compliance items.
- Claims: 503 requires a reasonable claims procedure and appeal.
Worked example
A recordkeeper offers bundled services for a direct fee plus revenue sharing from plan investments. The committee receives a 408(b)(2) disclosure showing both. It benchmarks the total compensation, documents that the arrangement is reasonable, and confirms no prohibited transaction exemption issue. Reasoning: the committee must evaluate both direct and indirect compensation; receiving disclosure alone is not enough, and the decision must be documented.
Traps
Do not assume 404(c) shields a fiduciary from all liability; do not confuse ERISA fiduciary rules with IRC qualification; and do not miss blackout notices, fee disclosures, or timely deposit of participant deferrals.