Series 65 Exam Training Series 65 Exam Topic

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that establishes legal and operational guidelines for private pension and employee benefit plans. Not all decisions directly involving a plan, even when made by a fiduciary, are subject to ERISA’s fiduciary rules. These decisions are business judgment type decisions and are commonly called “settlor” functions. This caveat is sometimes referred to as the “business decision” exception to ERISA’s fiduciary rules. Under this concept, even though the employer is the plan sponsor and administrator, it will not be considered as acting in a fiduciary capacity when creating, amending or terminating a plan. Among the decisions which would be considered settlor functions are:

• Choosing the type of plan, or options in the plan;
  
• Amending a plan, including changing or eliminating plan options;
• Requiring employee contributions or changing the level of employee contributions;
• Terminating a plan, or part of a plan, including terminating or amending as part of a bankruptcy process.
  
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