- 28 -
administered. Winger's Dept. Store, Inc. v. Commissioner, 82
T.C. at 887-888.
Neither the Code nor the regulations provide specific rules
identifying the types of investments which are considered to
satisfy or violate the exclusive benefit rule. Id.
Notwithstanding the lack of statutory and regulatory guidance,
this Court and other courts have recognized that, in appropriate
situations, improper investment practices of the trust may
warrant disqualification of the related pension plan under the
exclusive benefit rule. E.g., id. at 878 and the cases cited
thereat.
ERISA section 404(a)(1) requires a plan fiduciary to
discharge his or her duties for the exclusive purpose of (1)
providing benefits to participants and their beneficiaries and
(2) defraying reasonable expenses of the plan. Additionally, the
fiduciary must (1) perform those duties with the care, skill,
prudence, and diligence that a prudent investor would exercise
under similar circumstances, (2) diversify investments to
minimize the risk of large losses, unless diversification clearly
is not prudent under the circumstances, and (3) discharge those
duties pursuant to the terms of the plan to the extent they are
consistent with the provisions of title I. Id. The legislative
history of ERISA section 404(a), however, cautions: "It is
expected that courts will interpret the prudent man rule and
other fiduciary standards bearing in mind the special nature and
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011