What is a settlor decision versus a fiduciary decision?
Last updated October 2, 2026
Settlor decisions are business choices about the plan itself — whether to offer one, benefit levels, matching formulas, amendments, termination — and aren't governed by ERISA's fiduciary duties. Implementing those choices and running the plan are fiduciary functions held to ERISA's standards.
Not every plan decision is a fiduciary act. ERISA distinguishes the employer wearing its settlor hat — designing the deal — from the same people wearing the fiduciary hat — running it.
Settlor territory: establishing or terminating the plan, setting eligibility and the match, choosing to add or drop features. These are business decisions made in the company's interest.
Fiduciary territory: everything about implementation and operation — selecting investments and vendors, paying only reasonable expenses from plan assets, following the document, communicating accurately.
The distinction matters practically: committee charters and minutes should reflect which hat is being worn, and plan assets can pay for fiduciary functions but not settlor ones. Blurring the line — like using plan assets for design studies — is a classic audit finding.
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