How should I reply?

1. Section 402 of ERISA primarily deals with the responsibility of fiduciaries and imposes a duty of loyalty. It establishes the duty of plan fiduciaries to act solely in the interest of the participants and beneficiaries. Fiduciaries are required to act with the care, skill, prudence, and diligence under the circumstances. This duty helps in preventing mismanagement by setting a standard for decision-making. It encourages diversification of investments to minimize the risk of large losses, promoting responsible investment practices.

Section 405 of ERISA focuses on the establishment of a trust to hold plan assets and the bonding requirements for individuals who handle plan funds. The establishment of a trust to hold plan assets ensures a separation between plan assets and the assets of the employer. This segregation enhances transparency and helps prevent the mismanagement of plan assets. It also mandates that individuals handling plan funds be bonded to protect the plan against loss due to fraud or dishonesty.

ERISA has been effective in establishing a framework for transparency, accountability, and preventing mismanagement, there's always room for improvement. Enhancing disclosure requirements about fees, strategies, and risks, stricter enforcement mechanisms and penalties, more regular audits and requiring detailed reporting to regulatory authorities, and promoting education and training for plan fiduciaries are a few examples of ideas that ERISA could consider to improve transparency, accountability, and mismanagement.

2. How are the section 402 and 405 requirements carrying out the purpose of creating transparency, accountability, and the prevention of mismanagement of the investment of plan assets?

The section 402 and 405 requirements are carrying out the purposes of creating transparency, accountability, and the prevention of mismanagement of the investment of plan assets in many ways. Here are some examples. First, by ensuring that every employee benefit plan shall be established and maintained pursuant to a written instrumentSEC. 402. 1102 (a)(1). This ensures a documented record of employee benefits. In addition, section 402 and 405 carry out accountability by ensuring that Every employee benefit plan shall specify the basis on which payments are made to and from the planSEC. 402(b)(4). This ensures that employees have a clear understanding of their contribution as well as their employer's. Finally, section 402 and 405 prevent mismanagement of employee investment plan assets by requiring the benefit plan to have Fiduciaries and Trustees for checks and balances.

I believe ERISA is an extremely beneficial act that protects millions of Americans. I would like to see Erisa require stricter reporting and compliance policies.