Which describes an investment management arrangement under ERISA?

Which describes an investment management arrangement under ERISA?

• A. Involves a bank, insurance company, or registered investment adviser that has acknowledged fiduciary status in writing and has authority to make decisions without further involvement from the fiduciary.
• B. A plan sponsor that solely collects investment data for the plan.
• C. An arrangement where participants directly manage all plan assets.
• D. A fiduciary who never signs a written acknowledgment but still makes decisions.

Answer: (A)

Under ERISA, an investment management arrangement involves outsourcing the day-to-day management of plan assets to an outside entity that is recognized as a fiduciary in writing and has authority to make investment decisions without ongoing involvement from the plan fiduciary. This describes a bank, insurance company, or registered investment adviser that has acknowledged fiduciary status in writing and is empowered to manage investments autonomously within the agreed guidelines. The plan sponsor retains overall fiduciary responsibility but delegates the actual investment decisions to the outside manager through a written agreement, which is the essence of an investment management arrangement. Why the others don’t fit: merely collecting investment data isn’t about managing assets. A setup where participants directly manage all plan assets describes participant-directed plans, not a delegated investment management arrangement. A fiduciary who makes decisions without a written acknowledgment hasn’t been formally designated in writing as a fiduciary with delegated authority, so it doesn’t meet how ERISA structures these arrangements.

Under ERISA, an investment management arrangement involves outsourcing the day-to-day management of plan assets to an outside entity that is recognized as a fiduciary in writing and has authority to make investment decisions without ongoing involvement from the plan fiduciary.

This describes a bank, insurance company, or registered investment adviser that has acknowledged fiduciary status in writing and is empowered to manage investments autonomously within the agreed guidelines. The plan sponsor retains overall fiduciary responsibility but delegates the actual investment decisions to the outside manager through a written agreement, which is the essence of an investment management arrangement.

Why the others don’t fit: merely collecting investment data isn’t about managing assets. A setup where participants directly manage all plan assets describes participant-directed plans, not a delegated investment management arrangement. A fiduciary who makes decisions without a written acknowledgment hasn’t been formally designated in writing as a fiduciary with delegated authority, so it doesn’t meet how ERISA structures these arrangements.