§1105 Liability for Breach of Co-fiduciary

Summary

A fiduciary can be held responsible for another fiduciary’s bad actions in addition to any other penalties. That happens if the fiduciary knowingly helps or hides the other’s breach, fails to do their own duties so the other can breach, or knows about a breach and does not make reasonable efforts to fix it. When two or more trustees hold plan assets, each must use reasonable care to stop a co-trustee from breaching and they generally manage the assets together. If the trust document assigns specific duties to certain trustees, a trustee without those duties is not liable for another trustee’s mistakes. If the plan’s assets are in more than one trust, a trustee is only liable for breaches in trusts where they are a trustee, and trustees are not liable for following instructions covered by section 1103(a)(1). A plan may set written procedures to allocate non‑trustee fiduciary duties or to let named fiduciaries designate others to carry out those duties; if it does, the named fiduciary is not liable for the designee’s acts except when the named fiduciary violated section 1104(a)(1) in making or keeping the allocation or designation, or is otherwise liable under the rules above. “Trustee responsibility” means duties in the trust document to manage or control plan assets, excluding the power to appoint an investment manager under section 1102(c)(3). If an investment manager is appointed under section 1102(c)(3), trustees are not liable for that manager’s acts and are not required to manage assets the manager controls, but trustees remain liable for their own acts.