Types of Plans
In which type of plan do participants designate how much money they would like to contribute to their retirement plan? An example of this plan would be a 401(k) where you designate x$ or x% a month to be contributed from each paycheck?
A. Defined Benefit plan
B. Defined Contribution plan
C. Industry-wide multi-employer plan
B. Defined Contribution
What is the law that governs fiduciaries? This law establishes very strict standards of conduct for individual fiduciaries and governs any plan, fund, or program that an employer establishes for providing medical, retirement or other benefits.
ERISA - Employee Reitrement Income Security Act of 1974
What is another name for the Named Insured in a Fiduciary policy?
Plan Sponsor or Sponsor Organization
A. Single plaintiff
B. Class Actions
B. Class Actions
What is typically required as part of a fiduciary submission?
A. Renewal Application
B. 408(b)2 and 405(a) disclosures
C. Excessive Fee questionnaire
D. 5500s
E. All of the above
E. All of the above
In which type of plan do employers guarantee a stream of benefit payments upon retirement, often based on an employee's years of service?
A. Defined Contribution plan
B. Defined Benefit plan
C. Health and Welfar Benefit plan
B. Defined Benefit
What is NOT a fiduciary duty?
A. Act solely in the interest of plan participants
B. Keep expenses reasonable, as demonstrated through continual due diligence
C. Act in accordance with the plan documents
D. Skew investments and costs to work in favor of the plan sponsor (Employer) as well as the plan participants.
D. Skew investments and costs to work in favor of the plan sponsor (Employer) as well as the plan participants is NOT a fiduciary duty. All actions should be in favor of the participants, not the sponsor.
What is covered under Fiduciary Liability?
A. Settlements and defense costs
B. Unpaid benefits
C. All of the above
A. Settlements and defense costs. Benefits due are typically excluded under Fiduciary liability.
Excessive Fee litigation.
Carriers like recordkeeping fees per participants to be in what range?
A. $5-$15/participant
B. $30-$50/participant
C. $50+/participant
B. $30-$50/participant. We typically used to say $50/participant would be safe but now most carriers are looking closer to $30/participant for larger plans.
What type of retirement plan does Marsh offer its employees?
Defined Contribution - 401(k)
The duty of a fiduciary is to "act with the care, skill, prudence and diligence of a prudent man familiar with such matters." Is this standard the same as D&Os?
No, stricter than what is required of D&Os!
What types of retention(s) can be applied to Fiduciary Liability policies?
A. Base retention
B. Excessive Fee retentions
C. Mass/Class retentions
D. All of the above
D. All of the above. The vast majority of Fiduciary claims are class actions.
In late 2023, a new wave of litigation began focused on health/ welfare plans. What is it?
A. Forfeiture
B. Excessive fee
C. Tobacco surcharge
D. Administrative/ benefit error
C. Tobacco Surcharge
A. No excessive fee retention
B. $15M+
C. $1M+
C. $1M+
What is an example of a non-qualified/ non-ERISA governed plan?
A. Highly-compensated individual plans
B. Health savings accounts
C. Flexible spending accounts
D. All of the above
D. All of the above. Note that Fiduciary policies typically cover ERISA and non-ERISA plans that are sponsored by the organization
What is one way that a fiduciary could keep expenses reasonable within a plan?
Recordkeeper RFP
Who is an Insured under a typical Fiduciary policy?
A. any Plan
B. Any person who is serving or who has served as a trustee, committee member, or employee of a plan.
C. Anyone who admistered a plan in their capacity as a fiduciary, trustee, or otherwise.
D. All of the above
D. All of the above.
Sometimes underwriters will point to costs per participant being too high, the sponsor not doing an RFP in 3+ years, or insufficient investment choices/ options as negative risk factors. Which MMC company can help clients with these items?
A. Mercer
B. Oliver Wyman
C. Guy Carpenter
A. Mercer
If your client doesn't send their 5500s, where can you find them?
Online! DOL website, EFAST, FreeERISA
An ESOP is an Employee Stock Ownership Plan. This certain type of defined contribution plan invests and holds primarily the stock of the sponsoring employer. The largest ESOP in the United States is a Marsh client. Who is it?
Publix Super Markets
What section of ERISA minimizes the fiduciary liability of sponsors on participant directed accounts, provided the plans allows participants to exercise control, offers a broad range of investment options, allows changes to be made, and provides periodic performance material?
A. 404c
B. 5500s
5. 408(b)2
A. 404c
5500s are the reports employers must file to annually detail their employee benefits. Required to report under ERISA. 408(b)2 disclsoures are for covered service providers to disclose details about their services and fees to plan fiduciariares, ensuring transparency.
If a fiduciary realizes themself that they incorrectly filed certian documents one year and decide to voluntary comply with a settlement program via the IRS or Department of Labor, would the fiduciary policy cover expenditures related to this?
Yes, under a voluntary compliance program sub-limit.
We've seen forfeiture litigation become very prevelant in the fiduciary space. Can you explain what the allegations of this type of claim is?
When participants are not vested into retirement accounts and leave the plan, plan sponsors are using those funds to offset their own future contributions rather than offsetting plan participants, thus not acting in the sole benefit of participants.
Who are our top 6 carrier partners in Fiduciary and why is their expertise extra important?
Chubb, AIG, Zurich, Encore, Sompo, Travelers. It's important to place coverage with a primary carrier who understands the space as allegations can be complex and defense very costly.