HR Executives Named In 401k Lawsuit

In a recent Forbes article found here, company executives have been found personally liable for mistakes made with 401K plan administration; violating their fiduciary duty to the employees whose retirement funds depend on those plans.

Based on current laws, it is the businesses responsibility to act as the fiduciary for the employee group retirement plan. Here are some of the common mistakes to avoid:

Common Mistakes:

• Negligence - Failing to monitor and review the plan on a regular basis.
• Self Dealing - Putting the company's interest or owners interests above that of the employees.  This happens when the company owners are invested in a specific fund and control the options available or when the (large) company is included as part of one of the investment fund options.
• Excessive Fees - Plan Administrators should compare plan fees to a benchmark on an Annual Basis.
• Inappropriate Investments - Offering inappropriate investment choices.

What to do:
Executives Retirement plan fiduciaries (Company Owners and Executives) need to review the investment options in their plans to remain diligent in maintaining the most appropriate choices. In Addition, they need to review the fees being charged.  This is best done working with experts and  documenting the professional review of the plan. A fiduciary liability insurance policy should be acquired and reviewed annually to ensure sufficient coverage.

• Get a Fiduciary Liability Insurance policy. 
• Make sure you use an experienced group retirement plan adviser, they may event be able to serve as an outsourced plan administrator.

Questions?  Contact Us at 800-846-5902



References:

www.forbes.com/sites/brianmenickella/2019/02/07/hr-executives-again-named-in-401k-lawsuit/#38a21f7e131c

https://www.americanbar.org/groups/real_property_trust_estate/publications/ereport/rpte-ereport-winter-2019/erisa--thou-shall-not-pay-excessive-fees-/

https://www.marketwatch.com/story/401k-lawsuits-are-surging-heres-what-it-means-for-you-2018-05-09