Ep. 537 Protecting the Organization and Employees When Offering Retirement Plans

Rancho Mesa's Alyssa Burley and Vice President of the Human Services Group Sam Brown talk about mitigating risk for ERISA retirement plans, which Rancho Mesa offers to clients to attract and retain talented employees, reduce turnover, and build employee trust.

Show Notes: ⁠⁠⁠⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠⁠⁠⁠

Director/Host: ⁠⁠⁠⁠⁠Alyssa Burley⁠⁠⁠⁠⁠

Guest: ⁠⁠⁠⁠⁠Sam Brown⁠⁠⁠⁠⁠

Producer/Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production

© Copyright 2025. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.

I’m your host, Alyssa Burley, and today I’m joined by Sam Brown, Vice President of the Human Services Group with Rancho Mesa. And we’re going to talk about mitigating risk for ERISA plans.

Sam, welcome to the show.

Sam Brown: Thanks for having me. Always good to be back.

AB: Of course. Now, many Rancho Mesa clients offer a risk of retirement plans to attract and retain talented employees, reduce turnover, and build employee trust. So, for liability purposes, who is considered a plan fiduciary?

SB: Yeah, a good way to think about this in regards to who is a plan fiduciary can be defined both by title as well as their actual role they take in the plan. So typically a plan fiduciary is any person who is exercising discretionary control or authority over plan management or administration, exercising any authority or control over the management or disposition of plan assets, or rendering investment advice for fee or other compensation. So those are the roles or the activities you're taking, but as far as the actual role or title within a leadership framework, it may include plan trustees, plan administrators, members of an investment committee, investment managers, and corporate officers with plan oversight.

AB: So what should employers know about exposure to liability for fiduciaries of a plan?

SB: Yeah, there's a lot to understand. Savvy business leaders understand the U.S. labor code exposes employers to significant liabilities. And really this liability is due to the strict fiduciary duties the law requires of plan sponsors and those fiduciaries. So the liabilities are many, but what's important to understand, it's a little scary, is fiduciaries who do not follow established principles of conduct may be personally liable to restore any losses to the plan following a breach of fiduciary duty.

AB: Okay, so when it comes to breaches, what are some of the common complaints or allegations?

SB: Yeah, good question. A complaint of a breach of fiduciary duty may allege imprudent investment choices, excessive fees, lack of investment, diversity, poorly selected service providers, or a failure to follow plan documents.

AB: All right, now that we have established who is considered a fiduciary and how they may be liable for mismanagement of an ERISA plan, how can an employer protect itself, the employees' investments, plan assets, and the individual fiduciaries?

SB: Yeah, the best way, or one way, is certainly through insurance, through risk transfer. And there's really two lines of insurance coverage that an employer can pursue and bind. The first is we're going to try to protect the planned assets, the actual investments that are under control. And we're going to do that with a risk of fidelity coverage. So this will pay the insured for direct loss of money in securities belonging to an employee benefit plan caused by theft or forgery committed by a fiduciary. And typically what you're going to see is the minimum required limits are generally 10% of the plan assets with a $500,000 maximum when there is that requirement in place, but certainly you're not limited to $500,000. If you'd like to go above then we just need to, you know, fill out an application and seek underwriting approval. So that's protecting the plan assets, which is really important.

To protect the fiduciaries, which could be many different people, that's when we're going to pursue fiduciary liability insurance. So in the event of a claim, lawsuit, or government investigation, the policy will pay on behalf of the insured all costs of defense and damages up to the limit of liability.

AB: Okay, now we know liability insurance isn't perfect. Should employers be aware of any common exclusions in the fiduciary liability coverage?

SB: Yeah, there's two that would probably be smart to be aware of, and that is that the policy will not protect against intentional wrongdoing of any of the fiduciaries, and it's not going to cover claims against outside service providers. So, especially with our non-profits, you know, they may not have someone internal who's going to be managing the plan, so they're going to use a vendor. If a claim rises against that vendor, our insurance policies are not going to respond to that. That's where the vendor is going to have to have their own fiduciary liability insurance coverage.

AB: Yeah, that makes sense. So Sam, if listeners have questions about how to mitigate risk for their ERISA plans, what’s the best way to get in touch with you?

SB: The best way is phone or email. I’m at (619) 937-0175, that’s my direct line or sbrown@ranchomesa.com

AB: All right. Well, Sam, thanks for joining me in StudioOne™.

SB: Thanks for having me. This was good.

AB: Thanks for tuning in to our latest episode produced by StudioOne™. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.