How much ERISA fiduciary liability can be “outsourced?”

In an “ordinary” outsourcing transaction, the basic (substantive) question is: “How much of what I do now can I stop doing after outsourcing is implemented?” In an ERISA fiduciary outsourcing transaction, it’s just as important to ask: “How much of my current ERISA fiduciary liability will I no longer have after outsourcing is implemented?”

In this paper we address that second question – the extent to which fiduciary liability may be “outsourced” (avoided by the employer/plan sponsor) in an outsourcing transaction. We discuss three different approaches:

  1. The “traditional” approach, using plan delegation provisions
  2. Designating the outsourcer as the “named fiduciary” in the plan document
  3. Providing contractual remedies to allocate the “cost” of any fiduciary liability to the outsourcer
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