ERISA fiduciaries seem to have more and more to worry about. Plan fiduciaries worry not only about being a target of class action lawsuits, but also about the possibility of being selected for an IRS or Department of Labor audit. More and more fiduciaries are coming to realize that memorializing a set of carefully-thought out plan policies and following them can be their best defense in these situations. Written policies allow them to sleep better at night.

Though plan fiduciaries sometimes think that they have total flexibility to deal with issues if they don’t commit their processes to writing, when fiduciaries act without policies that set out good fiduciary processes, they may be missing important issues, such as benchmarking fees regularly, or monitoring the limits on plan loans. Just putting a policy together forces fiduciaries to focus on how you will do what needs to be done. If you act without written policy guides, plan sponsors also are risking acting in ways that are not consistent, which makes decisions harder to defend. Needed flexibility can be built into written procedures if they are properly drafted.

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