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    Are you liable for retirement plan malpractice?

    Most physicians in America know all about medical malpractice risks, but many are unaware of another type of liability exposure: retirement plan malpractice. 

    As a physician offering a retirement plan such as a 401(k) to employees, you are a plan sponsor and fiduciary to your plan participants. Per the Employment Retirement Income Security Act of 1974 (ERISA), a fiduciary has important responsibilities:


    • Acting solely in the interest of plan participants and their beneficiaries
    • Carrying out duties prudently
    • Following the plan documents
    • Diversifying plan investments
    • Paying only reasonable
    • plan expenses


    As a fiduciary, your personal assets could be at risk and could be used to compensate for fiduciary losses. Proper administration of a retirement plan will result in liability exposure reduction and an optimized plan. 


     Create an investment policy statement (IPS) that is easy to follow. ERISA states that a plan must create a clear, prudent, documented procedure and process for investment-related decision-making in relation to the plan’s goals and objectives for plan investment. This statement would include the processes for selecting and monitoring the plan’s investments. The IPS helps to reduce liability exposure by providing evidence of a prudent investment decision-making process. 

    Once the IPS is created, it should be communicated effectively to plan administrators and plan participants so that everyone clearly understands it. 


     Eliminate revenue sharing. Reduce liability exposure and save on fees by working with a record keeper who uses a fixed, per-participant, fee model and is not being compensated by revenue sharing. 


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