One of the simplest yet most integral parts of meeting your ERISA fiduciary duties is “sticking to the plan.” Section 402(a)(1) of ERISA requires that every employee benefit plan it covers be established and maintained pursuant to a written instrument.
Establishing a written plan document is a nonfiduciary “settlor” activity. This means that all of the decisions that go into designing the plan are not subject to the ERISA standard of care and cannot be challenged for a breach of fiduciary duty.
On the other hand, following the written plan document in the day-to-day management and administration of the plan is a fiduciary duty under Section 404(a)(1)(D) of ERISA to the extent that it is consistent with ERISA. ERISA requires strict compliance, and veering from the plan’s written terms is generally a per se violation of ERISA. Failure to follow the written plan terms is the most obvious breach of fiduciary duty for a court or regulatory agency to spot and enforce. For example, where a fiduciary’s decision may or may not plainly be a breach of prudence under ERISA, a clear violation of the plan’s written terms may otherwise be the court’s or regulatory agency’s path to finding a breach.