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By Craig Eissler, CFP®, CIMA®, AIF®, PPC®, Wealth Advisor

If your company is sponsoring a retirement plan, you need to know how to follow fiduciary guidelines to the letter – and limit your exposure to litigation. This article highlights some of the vulnerabilities exposed by recent lawsuits.

Say you’re operating and implementing a 401k plan. Or perhaps you’ve been hired to help service a 401k plan. You’ve identified your firm or your committee as a fiduciary to the plan – acting prudently and in the best interest of the participants – making decisions carefully and thoughtfully. That means you are immune to any liability from plan-related litigation, right?


Just because an investment manager, who has discretion and investment decision-making authority, is able to shield a plan’s stewards from liability with regard to particular investment decisions, that doesn’t mean that these stewards have completely offloaded their fiduciary obligations.

The industry continues to see litigation lawsuits filed for 401k plans where participants allege breach of fiduciary duties. Recently, many of the lawsuits were based on situations involving alleged ‘excessive fees,’ where plan participants alleged that the plan was charging participants higher fees than they should be or could be.

Here are a few recent examples of 401k litigation lawsuits:

  • Record Keeping and Administrative Fees:

    • Three employees of Tyson Foods, Inc. brought a proposed class action accusing the Arkansas-based meat-processing giant of mismanaging its $3.2 billion 401(k) plan by overpaying for recordkeeping. In the case, the plaintiffs alleged plan fiduciaries violated ERISA by failing to negotiate a better deal on fees, charging plan participants excessive total fees, and failing to look for a less-expensive service provider.
  • Target Date Fund Performance:

    • Law firm Miller Shah LLP has charged a host of plan sponsors with breaching their fiduciary responsibilities by making low fees their sole selection criterion, regardless of performance and other considerations. They allege that BlackRock’s target date funds underperformed and fiduciaries weren’t monitoring these investments. In some cases, the purported underperformance was less than one or two percent compared to the highest-returning fund they could find.

Of note, most 401k litigation cases have been filed against large plans with over $500m in assets. An even larger percentage of these tend to be against jumbo plans with $1b or more in assets. It is not a large leap to assume most cases are born from the potential settlement of a potential legal victory against a large sum of money.

Document, document, document

Regardless of your vulnerability to class action lawsuits, it’s important as a plan fiduciary to document all meetings and discussions that concern your plan administration of all facets of the plan. Remember that an objective process for selecting and monitoring plan service providers and investments starts with identifying needs. And it should be centered on understanding all fees and expenses and ensuring that costs remain reasonable for the services provided. There are no specified limits on fees, only that they be reasonable for the services provided.

Being a plan fiduciary will not exempt you from litigation. But documenting your decisions as a fiduciary will help shield you from legal challenges. Questions? Ask us!



Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.