Fiduciary Breaches: Another Employer Sued for Misuse of 401(k) Plan

Allegations of Excessive Fees and Unreasonable Investment Options

In the latest development in a string of lawsuits against employers over 401(k) plans, a new suit has been filed alleging fiduciary breaches for excessive recordkeeping fees and unreasonable investment options. The suit, filed in a California federal district court, is one of several recent lawsuits challenging the use of plan forfeitures, which occur when a participant leaves their job and does not roll over their account balance into a new plan or an IRA.

Key Allegations in the Lawsuit

* The plaintiffs allege that the employer breached its fiduciary duty by failing to prudently manage the plan's assets and by charging excessive fees for recordkeeping services. * The suit also alleges that the employer offered a limited number of investment options, some of which were not prudent investments for the plan's participants. * The plaintiffs are seeking damages and other relief for the losses they claim to have suffered as a result of the employer's alleged breaches of fiduciary duty.

Growing Trend of Fiduciary Breach Lawsuits

This lawsuit is part of a growing trend of lawsuits against employers over their management of 401(k) plans. In recent years, there have been numerous lawsuits alleging that employers have breached their fiduciary duties by failing to act in the best interests of their employees when managing their 401(k) plans.

Importance of Fiduciary Duties for Employers

Employers who sponsor 401(k) plans for their employees have a legal obligation to manage those plans in accordance with the Employee Retirement Income Security Act of 1974 (ERISA). ERISA imposes a fiduciary duty on employers to act in the best interests of plan participants and to prudently manage the plan's assets.

Steps to Avoid Fiduciary Breaches

Employers can take several steps to avoid fiduciary breaches in the management of their 401(k) plans. These steps include: * Conducting regular reviews of the plan's fees and investment options to ensure that they are reasonable and in the best interests of participants. * Documenting the decision-making process for selecting and monitoring investments. * Avoiding conflicts of interest by using independent investment advisors and recordkeepers. By following these steps, employers can help to minimize the risk of fiduciary breaches and protect the interests of their employees' retirement savings.