Which of the following is a core ERISA fiduciary duty?

• A. Prudence
• B. Maximizing profits
• C. Self-dealing
• D. Ignoring plan documents

Answer: (A)

The standard of care ERISA fiduciaries must meet is prudence—the exercise of care, skill, prudence, and diligence that a reasonably prudent person would use in similar circumstances. This means carefully evaluating investments, costs, and risks; seeking appropriate advice when needed; and documenting the decision-making process to show diligence. Fiduciaries must act in the exclusive interest of plan participants and beneficiaries, and they should diversify appropriately to manage risk. Maximizing profits isn't the defining requirement if pursuing higher gains would undermine prudent decision-making or loyalty to the participants. Self-dealing and ignoring plan documents are breaches because they put personal interests or improper directives ahead of the plan’s terms and participants' best interests.