HR Professionals Liability in 401K Administration

HR Professionals are subject to two very high standards: The SHRM Code of Ethics and Fiduciary Responsibility. We will examine how these obligations are inter-related as well as the challenges of fulfilling both in today's environment. Since the WorldCom and Enron debacles, there has been an increasing focus by the DOL and the Plaintiff's Bar on fiduciary issues. Fiduciary Responsibility has both legal and ethical implications, but by definition a fiduciary is someone in a position of trust. Fiduciaries are trusted to provide their employees with a reasonable opportunity for "secure retirement income." However, the complexity of the 401k marketplace (often intentionally so by service providers) creates what we call a Fiduciary Paradox. The fiduciary paradox is where fiduciaries have legal and ethical obligations (which carry a personal liability) but most of the 401k service providers, who have no fiduciary duty, make it difficult for the fiduciary to fulfill their obligations – thus making it difficult for the HR Professional to uphold several portions of the SHRM Code of Ethics particularly those portions listed above. This presentation outlines the basic fiduciary duties, how service providers make it difficult to fulfill these duties, and what the HR Professional must do to overcome these difficulties. Each part of the presentation incorporates portions of the SHRM Code of Ethics.