Author: jschreier

The Hidden (In Plain Sight) Costs of Participating in Multiemployer Fringe Benefit Plans

Employers that participate in multiemployer fringe benefit plans (i.e., a plan providing benefits for union employees into which more than one employer contributes) typically understand the basic costs of doing so.

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Minimizing the Risk of Costly 401(k) and 403(b) Investment Fund and Fee Lawsuits

As employers who sponsor 401(k) and 403(b) retirement plans prepare their 2017 year-end and 2018 “to do” lists, they should be sure to include a review of their processes for selecting and monitoring the investment funds they make available for plan participant investment and the fees their plans pay to record keepers and other service providers. Since 2006, more than 100 lawsuits have been filed against 401(k) and 403(b) plan sponsors and their employees responsible for selecting the plans’ record keepers and investment line-ups, alleging that they breached their fiduciary duty by allowing participants to pay excessive record keeping fees and invest in underperforming and expensive investment funds. The pace of these lawsuits has increased over the past two years, with around 30 new cases filed in 2016 and more in 2017. Under ERISA, 401(k) and 403(b) plan fiduciaries must act solely in the interest of plan participants and beneficiaries and as a prudent expert would under similar circumstances. The fee and investment lawsuits dig deep into the investment fund structure of a plan and the plan’s record keeping arrangement looking for areas in which lower cost and/or better performing funds were available and less expensive record keeping may have been possible.  Common allegations are that the fiduciaries breached their duties of loyalty and prudence by: Failing to remove underperforming investment funds Failing to offer less expensive investment funds...

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The HR Blog is published by Dickinson Wright PLLC to inform the public of important developments within the firm and practice areas. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in this blog.