Join us in Albuquerque this October for our Fall ESOP Forum

Are you an NCEO member? Learn more or sign up now.

Home » Publications »

Questions and Answers on the Duties of ESOP Fiduciaries

(Digital Version)

by David Ackerman

This is provided as a PDF, with no shipping charges. It also is available in a print version (for which shipping charges apply).
$25.00 for NCEO members; $35.00 for nonmembers

A 20% quantity discount will be applied if you are a member (or join now) and order 10 or more of this publication. If you need to order more than the maximum number in the drop-down list below, change the quantity once you have added it to your shopping cart.

This ebook may not be resold or given away to others. If you would like to share this book with another person, please purchase an additional copy for each recipient. For example, if you want a copy for yourself and two colleagues, choose the quantity 3, add it to your cart, and check out. You will then download one copy that you can also provide to your two colleagues. Thank you for respecting our rights as an independent publisher.

Quantity:

NCEO members who supply their members area username and password during checkout can download digital publications like this one immediately after submitting an online order. Others will immediately receive a download link that will become live within one business day.

A multitude of fiduciary issues arise in connection with employee stock ownership plans (ESOPs), starting with the question of who is a fiduciary. These issues affect many of the matters connected with the establishment and administration of an ESOP and involve many of the people involved with the plan. In this litigious age, acting as an ESOP fiduciary can be an unnerving prospect for some, and many people not designated as fiduciaries may find that they actually have that status. However, if fiduciaries keep informed, hire good advisors, and act in the best interests of plan participants, they are very unlikely to be sued, let alone to have a judgment entered against them.

This book, written by one of America's foremost experts on ESOPs, provides an accessible and detailed look at the kinds of fiduciary questions that arise in an ESOP context. Not only fiduciaries but also anyone involved with evaluating, implementing, or operating an ESOP will find it to be an invaluable reference.

The book is in question-and-answer format; there are 144 questions and answers in all, plus a foreword by NCEO Senior Staff Member Corey Rosen.

Publication Details

Format: PDF, 158 pages
Dimensions: 6 x 9 inches
Edition: 1st (June 2008)
Status: Available for electronic delivery

Usage Rights for NCEO Digital Publications

When you download an NCEO digital publication that you purchase or subscribe to (or that someone purchases or sponsors for you), you may copy it to any computer or other electronic device you personally use, and you may print it for your own use. However, you may not share it with others unless you purchase a license to do so or buy a copy for each person.

Contents

Foreword
Chapter 1: Determining Fiduciary Status
Chapter 2: Fiduciary Duties
Chapter 3: Prohibited Transactions
Chapter 4: Purchases and Sales of Employer Securities
Chapter 5: Personal Liability
Chapter 6: Protecting Against the Risk of Liability

Excerpts

From Chapter 1, "Determining Fiduciary Status" (footnotes omitted)

Q19 Can corporate officers and directors be plan fiduciaries for some purposes, but not for others?

Yes. ERISA states that "a person is a fiduciary with respect to a plan to the extent (1) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . ." An individual may serve both as a fiduciary and as an officer or other representative of a plan sponsor, and that individual then will serve dual roles with different duties and responsibilities. Plan administrators who also are officers of the plan sponsor assume fiduciary status only when and to the extent that they act as plan administrators, and not when they conduct business unregulated by ERISA. Therefore, when a person who is both an ERISA fiduciary and a corporate officer undertakes day-to-day business operations that may have a collateral effect on employee benefits, ERISA does not require that he or she operate solely in the interest of plan participants.

In determining whether a person who serves both as a corporate officer or director and as an ESOP fiduciary is subject to the ERISA fiduciary rules with respect to any particular act or omission, it must be determined whether the act or omission relates to a matter or transaction that involves plan assets. The duties imposed upon fiduciaries of employee benefit plans by ERISA apply only to transactions that involve the assets of the plan and to activities that involve the administration of the plan. In the case of an ESOP, the plan assets are the shares of the plan sponsor (and any other assets held by the plan). The Department of Labor's regulations interpreting ERISA make clear that properties acquired and owned by the plan sponsor are not themselves plan assets. Where an employee benefit plan, such as an ESOP, invests in an operating company, the plan's assets include its investment, but do not include any of the underlying assets of the operating company.