When are fiduciaries held liable for breaches under ERISA?

Fiduciaries are held liable for breaches under the Employee Retirement Income Security Act (ERISA) when they neglect their responsibilities in investment decisions. This means that fiduciaries have a duty to act prudently and in the best interest of plan participants and their beneficiaries. If they fail to do so—by not exercising the care, skill, prudence, and diligence that a prudent person would use in similar circumstances—they may be held liable for losses that occur as a result of their negligence.

In essence, fiduciaries must actively monitor investments, make informed decisions, and diversify the plan’s assets. Their responsibility includes ensuring that any investment strategies employed are suitable and aligned with the interests of participants. A breach of this duty can lead to significant financial repercussions for the fiduciaries involved.

Understanding the roles and responsibilities of fiduciaries is crucial under ERISA, emphasizing that their primary obligation is to protect plan assets and uphold participants' interests unwaveringly. This framework helps ensure that fiduciaries are held accountable for their actions, promoting transparency and responsible management of retirement funds.