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Most people tend to think that because their employers contribute money that goes into their retirement plan that they play the most significant role. However, in order to ensure your plan’s assets are managed adequately throughout your life, other essential functions need to step up to make sure tasks around your investments are done correctly, and your money is protected. For these reasons, some consider the plan’s trustee to be one of the most essential roles. 

What is a Plan Trustee

A trustee is someone responsible for the investments that are held by the plan. Their primary function is to act in the best interest of the plan’s participants, which they carry out by these specific duties: 

  • Recording: They are responsible for maintaining full and accurate records of your disbursements, transactions, and investments.
  • Accept Contributions: They are in charge of accepting the contributions to your plan.
  • Responsible for Distributions: They are in charge of authorizing the timing and the method of payment as well as the amount to the specific participants of the plan.
  • Determine Eligibility: They are in charge of determining the employees eligibility into the plan.
  • Accounting Services: They are responsible for the trust fund’s accounting, which will be used in the plan’s annual filings.
  • Agent: The trustee is often served with notices of any claim against the plan.  

Why is a Trustee’s Role so Critical

A trustee plays an extremely vital role in the management of your plan. They not only have the ability to exercise authority over the plan’s assets but also have the added responsibility of being the plan’s administrator. Their role is not only critical but comes with a lot of discretion and responsibility. 

  • The trustee’s main primary fiduciary duty is making sure the plan assets are managed in the best interest of its participants and the named beneficiaries. 
  • The trustee must follow the specific rules in administering the plan and following the standard of care that a reasonable fiduciary would pursue when fulfilling their critical responsibilities. Failing to do so can leave them liable for the damages that result. 

Have more questions about retirement administration? Schedule a plan discussion with us or take 30 seconds to find which plan is best for your company with the retirement plan evaluator.

 Sources:

What is a Trustee? Your Fiduciary Duties. (2015). By Beth Harrington. Benefit Resource Inc.