Co-fiduciary Liability for Late Deposit of Deferrals (Posted May 15, 2003) Technical Tip 29: The following question and answer are from the DOL Q&A Session at the 2000 ASPPA Annual Conference: Assume that an employer is late in making its deposits of employee deferrals into a 401(k) plan. Assume that a fiduciary--who is not directly responsible for either forwarding the contribution or for collecting it--becomes aware of the late payment of deferrals. Can that fiduciary be liable if there are losses of employee money due to the failure to transfer the deferrals? Could an investment advisor be liable in this fact situation as a co-fiduciary? DOL Response: Yes. ERISA Section 405 provides for co-fiduciary liability and, in particular, Section 405(a)(3) provides that a fiduciary shall be liable for a breach of fiduciary responsibility of another fiduciary if he or she has knowledge of a breach by such other fiduciary unless he or she makes reasonable efforts under the circumstances to remedy the breach. An investment advisor could be liable in this fact situation if the investment advisor is a fiduciary itself. Caveat: The answer was drafted by the program moderators, including Fred Reish, based on their understandings of discussions with four senior officials of the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. As a result, it does not represent a formal or binding position statement by the EBSA. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.