On June 4, 1975, the Department of Labor issued an interpretive
bulletin, ERISA IB 75-4, announcing the Department's interpretation of
section 410(a) of the Employee Retirement Income Security Act of 1974,
insofar as that section relates to indemnification of fiduciaries.
Section 410(a) states, in relevant part, that ``any provision in an
agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or duty
under this part shall be void as against public policy.''
The Department of Labor interprets this section to permit
indemnification agreements which do not relieve a fiduciary of
responsibility or liability under part 4 of title I. Indemnification
provisions which leave the fiduciary fully responsible and liable, but
merely permit another party to satisfy any liability incurred by the
fiduciary in the same manner as insurance purchased under section
410(b)(3), are therefore not void under section 410(a).
Examples of such indemnification provisions are:
(1) Indemnification of a plan fiduciary by (a) an employer, any of
whose employees are covered by the plan, or an affiliate (as defined in
section 407(d)(7) of the Act) of such employer, or (b) an employee
organization, any of whose members are covered by the plan; and
(2) Indemnification by a plan fiduciary of the fiduciary's employees
who actually perform the fiduciary services.
The Department of Labor interprets section 410(a) as rendering void
any arrangement for indemnification of a fiduciary of an employee
benefit plan by the plan. Such an arrangement would have the same result
as an exculpatory clause, in that it would, in effect, relieve the
fiduciary of responsibility and liability to the plan by abrogating the
plan's right to recovery from the fiduciary for breaches of fiduciary
obligations.
While indemnification arrangements do not contravene the provisions
of section 410(a), parties entering into an indemnification agreement
should consider whether the agreement complies with the other provisions
of part 4 of title I of the Act and with other applicable laws.
[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]
