Final answer:
A trust organization's fiduciary duty of loyalty is primarily to the plan participants. The fiduciaries of a pension plan must act purely in the interest of plan participants and their beneficiaries, in line with the regulations set forth by ERISA. The correct option is b.
Step-by-step explanation:
A trust organization has a fiduciary duty of loyalty to its beneficiaries, which in the context of a pension plan would extend to both the plan participants and potentially to the plan sponsor if there is a direct relationship. However, in the strictest sense, the fiduciary's primary responsibility is toward the plan participants, as they are the ultimate beneficiaries of the trust. The primary regulator for the Employee Retirement Income Security Act (ERISA), such as the Department of Labor, does not directly become a beneficiary of a trust; its role is to oversee and ensure compliance with legal standards. Similarly, while employers or plan sponsors have overarching responsibilities, the trust's loyalty is not directly owed to them, except in their role as a participant, if applicable.
As a more detailed explanation, the Employee Retirement Income Security Act (ERISA) is very clear about the fiduciary responsibilities owed by those who manage employer-sponsored retirement plans. Under ERISA, trustees and other fiduciaries must act purely in the interest of plan participants and their beneficiaries. This includes but is not limited to offering a diversified range of investment options to plan participants and acting with prudence in the management of the plan.
The Pension Benefit Guarantee Corporation (PBGC) and entities such as the Securities and Exchange Commission (SEC) or the Federal Deposit Insurance Corporation (FDIC) each have specific roles related to the oversight, insurance, and regulatory compliance of pension plans and financial institutions, but they do not become the primary beneficiaries of fiduciary loyalty. Hence, it is clear that the primary duty of loyalty of a trust organization lies towards the plan participants.