Plan Administration, Government Reporting, and Fiduciary Responsibilities
Fiduciary conduct
ERISA 404(a)(1) imposes four duties: act solely in the interest of participants (loyalty), with the care of a prudent person (prudence), diversify investments to minimize the risk of large losses, and follow the plan documents. Breaching fiduciaries may be personally liable for losses and must restore profits; ERISA 405 makes a fiduciary liable for another's breach when it knows of the breach and fails to act. ERISA 404(c) shifts investment responsibility to participants only when the plan permits participant direction and provides the required disclosures, including 404a-5 fee and investment information and 408(b)(2) service-provider disclosures to plan fiduciaries.
Reporting
Large plans (100 or more participants at the beginning of the plan year) file Form 5500 with Schedule H and an independent audit; small plans may file Schedule I and are exempt from audit. Schedules A, C, D, R, and SB attach as applicable. Form 5558 extends filing by two and a half months. Form 5330 reports excise taxes, including prohibited transactions and late contributions.
Traps
Participant contribution timeliness is judged by the as-soon-as-reasonably-possible standard, with DOL safe harbors of three business days for large plans and seven for small plans; the 15th business day of the following month is an outer limit, not a safe harbor. ERISA 412 requires a bond of 10% of plan assets, minimum $1,000, maximum $500,000 ($1,000,000 if the plan holds employer securities). A 3(38) manager accepts discretionary authority and shifts liability; a 3(21) adviser gives advice but does not.
Rule of thumb: document the process, not just the outcome - a prudent process is a fiduciary's best defense.