§1105 Liability for breach of co-fiduciary

Summary

A fiduciary must answer for another fiduciary’s breach in three cases. First, if the fiduciary takes part in or hides another’s wrongful act while knowing it is wrong. Second, if the fiduciary fails to follow the duty in 1104(a)(1) when doing his own tasks and that failure lets the other fiduciary commit a breach. Third, if he knows about the other fiduciary’s breach and does not make reasonable efforts to fix it. When two or more trustees hold plan assets, each must try to stop a co‑trustee from doing wrong, and they generally share control of the assets unless the trust document assigns specific duties to particular trustees. If duties are properly assigned, a trustee is not responsible for losses caused by another trustee’s acts that were not his assigned duties. If a plan lets named fiduciaries allocate duties or name others to carry out duties, the named fiduciary is usually not liable for that other person’s mistakes unless the named fiduciary failed to follow 1104(a)(1) in making or keeping the assignment or would be liable under the three cases above. “Trustee responsibility” means the duty to manage or control plan assets under the trust instrument, excluding the power to appoint an investment manager under 1102(c)(3). If an investment manager is appointed under 1102(c)(3), trustees are not liable for the manager’s acts and do not have to manage assets the manager handles, but trustees remain liable for their own actions.