Certified Plan Sponsor Professional (CPSP) Practice Exam

If recordkeeper employees have disclaimer of fiduciary responsibilities, should plan sponsors be concerned about their actions?

1. Yes, plan sponsors have a duty to monitor

2. No, the disclaimer absolves them of liability

3. Only if they exceed their scope of service

4. Only if there is documented misconduct

The correct answer is: Yes, plan sponsors have a duty to monitor

Plan sponsors should indeed be concerned about the actions of recordkeeper employees, even if they have a disclaimer of fiduciary responsibilities. This concern arises from the fact that, as fiduciaries, plan sponsors are obligated to act in the best interest of the plan participants and beneficiaries. This includes the ongoing responsibility to monitor the performance and actions of their service providers, including recordkeepers. The duty to monitor is a critical aspect of fiduciary responsibility, and it encompasses ensuring that recordkeepers are performing their functions effectively and in compliance with applicable regulations and contractual obligations. If recordkeepers act negligently or engage in misconduct—even if they have a disclaimer—it could still expose plan sponsors to legal liability. Therefore, plan sponsors must actively oversee their recordkeepers to ensure that they are fulfilling their duties properly, maintaining compliance with regulations, and safeguarding participant interests. Protecting the plan and its beneficiaries requires vigilance and proactive monitoring, regardless of any disclaimers in place.