The topic here is "hard coding" what otherwise would be fiduciary decisions in a plan document. For example, instead of saying in the document that the plan shall be administered by a Committee established by the Board, which would make the Board a fiduciary for purposes of figuring out who the members of the Committee are and would impose a duty to monitor on the Board, the plan document just says that "the Plan shall be administered by the Committee, which shall consist of the Treasurer, the Director of Benefits and the Director of Employee Relations," or something like that. Seems simple enough. Doesn't seem like anyone should have a fiduciary duty with respect to the designation of the administrator.
And, before Fifth Third Bancorp, a lot of us thought that a plan provision to the effect of "the Plan shall offer Company Stock and the Company Stock Fund shall be an ESOP" would have a similar effect. So, either the administrator would have no duty with respect to whether Company Stock was offered or would be under some adjusted duty of care with respect to it (for example, there would be a presumption of prudence and something really bad would need to be happening to the company before the administrator needed to override the plan provision).
The Supreme Court very clearly said there was no presumption of prudence in the case of an ESOP (which, in this case, was a hard-coded Company Stock Fund), but didn't give us a clear indication of how we deal with hard-coded provisions. What creates the most confusion for me is the discussion of ERISA Section 404(a)(1)(D), which requires fiduciaries to act "in accordance with the documents and instruments governing the plan insofar as such documents are consistent with the provisions of this subchapter." In the same paragraph, the Court quotes ERISA Section 410(a) ("any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility . . . for any . . . duty under this part shall be void as against public policy").
What is missing from the opinion is any discussion of the scope of the administrator's duty; all we have is a discussion of the level of that duty when it exists. What we need to know is whether a plan can dictate whether the administrator has any duty with respect to company stock. Specifically, can we have a provision that says "the administrator shall have no authority to eliminate company stock as an investment unless the ongoing viability of the company is uncertain?" I don't think that violates either 404(a)(1)(D) or 410(a) any more than the Committee designating provision that I described above. And, if it does, because ERISA requires that some fiduciary be responsible for investments, then Fifth Third Bancorp shouldn't stand in the way of other hard-coding, although I'm not crazy about that result because it requires us to determine, in each instance, whether a given provision is one for which a fiduciary needs to be on the hook.
The practical impact here is pretty simple. Look at your plan documents and, in situations like the ones discussed here, make it very clear what the plan design decision is and that it's a plan sponsor determination that no fiduciary has the authority to override. While the Fifth Third Bancorp decision doesn't make it impossible that a court will cite 410(a) and say that this kind of clarification is a "provision . . . reliev[ing] a fiduciary from responsibility," I think we have to hope that the courts will understand that the plan at issue in this case didn't have that kind of limiting language (at least, the Court didn't refer to any) and that there needs to be an analysis of the scope of duty before you can figure out whether the duty has been discharged.
The more I dig into this decision, the more that I think it creates uncertainty that will give the courts a lot of opportunities to weigh in, as they decide that a given lawsuit states a claim or that a fiduciary should get out on a motion to dismiss. That's not a good situation for in-house fiduciaries.