With trillions of dollars tied up in corporate retirement plans, there’s no doubt trial lawyers see a ripe target for both class action suits as well as individual actions. And it’s the plan sponsor that typical wears the bulls-eye for any perceived sleight. Borror predicts “participants will continue to claim their account balances have been materially reduced due to failure of the fiduciary to either ensure the fees charged were reasonable in relation to the services provided, or to select and to monitor the retirement planservice providers with the skill of a prudent professional.”With the potential of claims coming from so many directions, what’s a 401k plan sponsor to do?
“The costs of responding to any of these claims are astronomical when compared to the costs of making affirmative corrections,” says Borror. He offers this conclusion: “In short, any employer that even mildly suspects his or her plan is vulnerable to such a claim should have the plan reviewed by an independent professional.”
Plan sponsors will be required to follow the new fee disclosure regulations beginning August 31, 2012. At this time plan sponsors must inform all plan participants of the fees the participant pays for their plan. This will increase complaints by participants partly because law firms will be promoting their services. With many baby boomers unprepared for retirement some will look to litigation to correct their shortfall.
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- 401k Sponsors Increasing Focus on Investments (401kplanadvisors.com)
- A Closer Look at Fiduciary Status Under ERISA (401kplanadvisors.com)
- Pension Plan Sponsors (401kplanadvisors.com)