Can my retirement plan fiduciary be held liable for investment losses?

What the Law Says

The Employee Retirement Income Security Act (ERISA) establishes strict duties for retirement plan fiduciaries and makes them personally liable for losses resulting from breaches of those duties.

Under federal law, anyone who exercises discretionary authority or control over a retirement plan’s management or assets is considered a fiduciary—and owes duties of loyalty, prudence, and diligence to plan participants and beneficiaries.

ERISA does not require proof of fraud or intentional misconduct: even negligent or imprudent investment decisions—such as failing to monitor funds, ignoring excessive fees, or retaining poorly performing investments—can trigger liability if they cause plan losses.

Fiduciaries must act 'with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use'—this is known as the 'prudent man rule.'

Statutory Text

The Congress finds that the growth in size, number, and complexity of employee benefit plans has been rapid and substantial; that the operational problems involved in administering such plans have become increasingly difficult and complex; and that the financial assistance provided by the Federal Government to private pension plans through the tax system is substantial.

— 29 U.S.C. § 1001 — Congressional findings and declaration of policy

What to Do

Sources