Under ERISA, fiduciaries are personally liable for losses to benefit plans incurred as a result of their alleged breach of duties.
Trustees of employee benefit plans are expected to act in the best interests of the plan participants. If this duty is compromised, either intentionally or unintentionally, trustees can be held personally liable. In today’s litigious society, people who perceive they have been wronged react with lawsuits that can cost millions of dollars to defend and settle. This makes fiduciaries potential lightning rods of liability, particularly in light of the amount of money held in retirement plans today, and the valuable protection those plans afford to their participants.
The large majority of fiduciary claims are brought by past or present employees or their families. However, claims may also be brought by another fiduciary or by the Department of Labor (DOL), which enforces the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). When the DOL brings an action, fiduciaries can face civil penalties as well.