Welcome to the second to last installment of our pharmacy 401k fiduciary responsibility series. We hope you have enjoyed the journey so far and have learned what it means to be a fiduciary. Our next blog will summarize the series and give you some specific action steps you can use moving forward to improve your pharmacy 401k plan and satisy your fiduciary responsibility. 

This installment will focus on two areas. The first is the duty you have to follow plan documents and the second is avoiding prohibited transactions, self dealing, and conflicts of interest.  So, let's get started.

The duty to follow plan documents is probably the most straightforward duty you have as a fiduciary on your plan. A simple plan review and audit can make sure this duty is being satisfied. We suggest you set up a meeting with your plan advisor and make sure he or she documents the meeting and any decision you make about the plan. Be sure to focus on the parts of the plan that are being used effectively and eliminate any parts of the plan that are not being used by the participants.

The second part of the blog is a little more complicated. Prohibited transactions, self dealing and conflicts of interest encompass many different things. Below is a list with and explanation to help you moving forward.

1. The sale, exchange, or leasing, of any property between the plan and a party of interest - we heard a story a few years back of a business owner using his 401k to buy a piece of property from his grandfather. This would be a conflict of interest because of the relationship between the owner and the seller of the property.
2. Lending money or any other extension of credit between the plan and a party of interest - lending money from the plan should never happen unless it is a participant taking a loan from his or her personal 401k account.
3. Furnishing of goods, services, or facilities between the plan and a party of interest - the plan should not be used to furnish and goods, services or facilities for any person. A good example of this is using plan assets to help start a business for a friend with the hope that the business will be profitable and pay the plan back with interest.
4. Transfer to, or use by or for the benefit of a party of interest, of any plan assets - this clause basically says that if the first 3 clauses do not adequately define a conflict of interest, then this will. Allowing any outside party to access 401k plan money is a very tricky thing and, therefore, it typically is best not to do it.
5. Causing the plan to acquire and retain employer securities or employer real property - requiring your participants to buy company stock or using 401k plan assets for business expansion typically is a conflict of interest and should not be considered.
6. Self Dealing - anything that puts you, the fiduciary, at an advantage over the plan participants is considered a conflict of interest unless allowed by ERISA (there are very limited exceptions to this rule).