Fiduciary Litigation for Defined Contribution Plan Administrators: Risks and Challenges

Fiduciary responsibilities of sponsors and administrators for defined contribution plans, such as 401(k) or 403(b) plans, require a duty of prudence under ERISA. Failure to follow best practices for defined contribution plans can result in litigation and cost millions in legal fees and settlements.

The methods of plan investment selection and excessive fee arrangements are often the basis of litigation alleging breach of fiduciary duty against plan sponsors and administrators of defined contribution plans. For example, several court decisions have found that fiduciaries breached their duties to participants by selecting investment options with high fees when lower fee options were available.

In addition to prudently selecting investments and entering into reasonable fee arrangements, fiduciary responsibilities under ERISA require plan sponsors and administrators to monitor investments, monitor fee structures, avoid conflicts of interest, and act in the best interest of plan participants and beneficiaries at all times. Fiduciaries must understand the full scope of their fiduciary responsibilities under ERISA to avoid breach of fiduciary duty claims by participants. In addition, the new DOL fiduciary rule subjects investment advisers and others to ERISA fiduciary standards. The issue was recently a source of controversy when the Fifth Circuit vacated the DOL fiduciary rule days after the Tenth Circuit issued a decision upholding it.

Our panel will provide plan sponsors, administrators and ERISA counsel with a comprehensive understanding of fiduciary litigation and the risks and challenges it presents. The panel will discuss the necessary methods of selecting plan investments, monitoring fee structures, defending and avoiding breach of fiduciary duty claims and the implications of recent court decisions involving the new DOL fiduciary rule.

1. Fiduciary responsibilities of plan sponsors, trustees and administrators under ERISA
2. Breach of duty claims involving selection of plan investments and fee arrangements
3. Methods for avoiding breach of fiduciary duty claims for defined contribution plan sponsors, trustees and administrators
4. Implications of recent court decisions regarding the new DOL fiduciary rule
5. Best practices in handling fiduciary litigation for defined contribution plans

The panel will review these and other crucial issues:

• Understanding the fiduciary responsibilities of defined contribution plan administration under ERISA
• The basis of recent fiduciary litigation involving the election of plan investments and fee structures
• How to identify those issues that could result in fiduciary litigation
• The extent of fiduciary duty liability under ERISA after recent cases involving new DOL fiduciary rule
• Best practices in avoiding and handling litigation premised on breach of fiduciary duty claims