With the holidays upon us, we've reached the time of year when most gift giving takes place. Fiduciaries are often the recipients of gifts and we were recently asked whether they are permitted to accept them? If so, what kind and how large? Although not an attorney, as fi360's CCO I have some suggestions.
When considering whether or not to accept a gift, a fiduciary should always ask his or herself whether they believe it will impair their ability to carry out their duties objectively. DOL's Employee Benefits Security Administration (EBSA) provides guidance to investigators or auditors (See No. 12) evaluating if a fiduciary violation has occurred, stating that the investigator should determine if "the receipt of gifts, gratuities, or other consideration were for the fiduciary's personal account and received in connection with a transaction or transactions involving the assets of the plan." They go on to say that the "Investigator/Auditor should also determine whether the fiduciary of the plan maintained a reasonable written policy or plan provision governing the receipt of items or services from parties dealing with the plan and whether the fiduciary adhered to that policy."
EBSA's guidance is instructive for all fiduciaries, not just plan sponsors. The first step is to have a gift policy that provides guidance regarding their acceptance. A typical policy would set parameters under which gifts can be accepted and may include:
- the maximum monetary value allowed ($200-$300 seems reasonable)
- prohibition from certain types of gifts, such as high profile sports events (Super Bowl, World Series, etc.)
- a requirement to keep a record of all gifts received (this would not normally include things like an occasional lunch)
Of course, the policy could be that no gifts of any type or amount can be accepted at all, but this would most likely be excessive. Most policies would allow gifts of a nature that could not reasonably be interpreted as influencing decisions as a result. So, in general, think fruit baskets, rather than Final Four tickets.
A comprehensive overview of accepting gifts and setting policies can also be found from the Vedder Price law firm. Always consult legal counsel when drafting policies on gifts to ensure they are in compliance with ERISA and all relevant laws.
So enjoy the holidays, graciously accept gifts that conform to your gift policy, and continue doing what all fiduciaries are called to do, look out for the best interests of your clients, participants and beneficiaries.
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