Commentary: Mandatory distributions from employer-sponsored retirement plans are a creation of regulation specifically, a section of ERISA that allows plan sponsors to distribute accounts with less than $5,000 out of a qualified plan and into a safe harbor IRA. If plan sponsors follow the rules, they are protected from legal recourse, and the rules are simple: act in a fiduciary manner when choosing a provider for their program. However, that word fiduciary is often hard to define and can be interpreted in many ways, so it begs the question: How does a sponsor best fulfill that responsibility in the context of a mandatory distribution program?
Fortunately, after reviewing the basic rules laid out by ERISA, we can readily identify a handful of superior, bright line program attributes that are clearly fiduciary friendly. Lets explore each of these features to see how they provide more complete fiduciary protection for an employer-sponsored plans mandatory distribution program.
