What is the status of members of a plan committee responsible for selecting a plan recordkeeper?

Members of a plan committee responsible for selecting a plan recordkeeper are classified as 3(21) functional fiduciaries under the Employee Retirement Income Security Act (ERISA). This designation indicates that they hold a fiduciary responsibility to act in the best interests of the plan participants and beneficiaries, and they are liable for their decisions regarding the selection and oversight of the recordkeeper.

Being a 3(21) fiduciary means that these individuals must exercise a prudent process in evaluating the capabilities and services of different recordkeepers, ensuring that they select one that meets the needs of the plan. Their decisions must be well-informed, documented, and aligned with the overall objectives of the plan. This fiduciary status involves both the duty of care and the duty of loyalty, emphasizing the importance of making decisions based on the best interest of plan participants rather than personal or external interests.

This role is significant as it establishes accountability and sets a standard of conduct that these committee members must adhere to, ultimately protecting the rights and benefits of the plan participants. The consideration that they are merely advisers to the plan or exempt from liability misrepresents the gravity of their responsibilities and the legal implications of their decisions.