I was wondering if I could get some feedback on the following situation: A bank acts as trustee for a 401(k) plan. The plan holds employer stock as an investment option. The bank also owns employer stock and gives recommendations (investment options, administrative, etc.) regarding the 401(k) plan. The bank is clearly a party-in-interest. What liability issues arise from this situation? I am somewhat bothered by the fact that the bank owns employer stock and acts as trustee to a plan where employer stock is an investment option. I'm not sure why though.

I think if the bank serves as sole trustee for just the company stock portion of your plan's investment options, there's no problem. But if they serve as trustee for the entire plan, you may have an issue. Does somebody who acts as a plan fiduciary and is also an employee of the plan sponsor have input on the communciations?

Thanks for the response! The bank's trustee obligations are not just limited to the employer stock. As a matter of fact, the bank is not the "investment trustee" rather they use another organization to handle investment selection and maintenance. However, they have been giving advice with respect to some the plan's investment options including the employer stock (which has since tanked of course!). I'm just considered about some of the issues that could arise resulting from the banks various "roles" with respect to the plan. Especially now that the employer stock's value has fallen so drastically.

I agree with your analysis.

Our ERISA lawyer would never allow us to get ourselves into that situation, even if we tried!

Does anyone else have any thoughts on this issue?