DOL Provides Guidance on Fiduciary Duties of Directed Trustees

Mondaq Business Briefing, December, 2004

The Department of Labor (the "DOL") recently issued Field Assistance Bulletin 2004-03 (the "Bulletin") under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Bulletin provides the DOL's views on the responsibilities of directed trustees under ERISA, particularly with respect to directions involving employer securities. The Bulletin states that a directed trustee, by definition, will always be a "fiduciary" under ERISA, but that the duties of a directed trustee under Section 403(a)(1) of ERISA are "significantly narrower" than the duties generally ascribed to a discretionary trustee. Under ERISA, a directed trustee may follow the "proper" directions of a named fiduciary, and a direction is "proper" only if the direction is "made in accordance with...