Litigation Involving 401(k) Plans

Litigation against 401(k) plans have been increasing since last year.  Typically lawsuits have been aimed at large plans, but now a much smaller 401(k) plan is being scrutinized.  A recent lawsuit against Damberg et al. v. LaMettry’s Collison Inc. et al. is focused on excessive fees being charged to participants.  This lawsuit may set a precedent for others to follow. The lawsuit alleges that plan fiduciaries breached their duties under ERISA for allowing excessive fees to be charged for recordkeeping, administration, and investment options.

Fiduciaries should be aware of and understand the fees that are paid by the 401(k) plan.  It is recommended by Clark Schaefer Hackett that all companies “work with an independent financial advisor that is experienced and qualified to provide conflict-free advice about 401(k) plans.” These advisors are able to monitor the plans and benchmark fees against similar plans. The right advisor will have a thorough understanding of retirement plans and their own responsibility as a fiduciary.

Sources:

Clark Shaeffer Hackett

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