Socially responsible investing often sounds like an intriguing idea, but investing plan assets in a socially responsible manner is a notoriously tricky proposition. Earlier this year, the US Department of Labor issued additional guidance clarifying existing DOL guidance applicable to socially responsible investment of plan assets. However, the clarifications included in FAB 2018-01 may further limit the scenarios in which socially responsible investing could be considered prudent under the Employee Retirement Income Security Act of 1974, as amended (ERISA).
The U.S. Department of Labor (DOL) recently issued guidance on whether accounts holding revenue sharing payments constitute “plan assets” under ERISA. Prior to the issuance of the DOL guidance, it was unclear whether these amounts would be deemed to be ERISA plan assets. If such amounts were treated as ERISA plan assets, they would be subject to various requirements under ERISA. The DOL also addressed the responsibilities of plan fiduciaries in evaluating revenue sharing agreements. Plan fiduciaries should review their current revenue sharing arrangements in light of the new DOL guidance.
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